Two key benchmarks on Thursday held steady as those involved in the U.S./Iran peace negotiations again sent word that “positive progress” had been made – although there’s still considerable skepticism that any kind of lasting accord can be reached.
Brent settled up 23 cents to $71.89 per barrel after Qatar, which is mediating talks between Washington and Tehran, said U.S. and Iranian officials made headway in indirect talks aimed at resolving issues related to their memorandum of understanding.
West Texas Intermediate settled up 11 cents to $68.69 per barrel.
For the second time this week, talk was not of the tightness incurred by months of hostilities in the Middle East, but of a glut caused by a quicker-than-expected recovery of global crude flows.
According to trade sources, five supertankers carrying 10 million barrels of Saudi Aradia oil loaded from Ras Tanura exited the Strait of Hormuz; Saudi Aramco switched to spot pricing to accelerate sales in Asia.
Citing the dramatic increase in oil shipping, UBS cut its third-quarter estimate for Brent by $25 per barrel to $80, reduced its fourth quarter 2026 forecast by $10 per barrel to $80, and trimmed its 2027 outlook by $10 per barrel to $75.
HSBC predicted a short-term mini glut but expected the market “to absorb returning Middle East barrels through gradual restocking, alongside the end of IEA strategic stock releases in July.”
For her part, Vandana Hari, founder of Singapore-based Vanda Insights, seemed to take positive reports of the MOU talks at face value, remarking, “the two sides appear to have backed off confrontation on the issue of the interim Hormuz transit regime, at least for the time being.
“I expect crude to continue grinding lower until the backlog of stranded barrels has cleared, and prices could even swing into oversold territory.”
But Neil Crosby, an oil market analyst at Sparta Commodities in Singapore, was less enthused by the current geopolitical situation: “This is by no means a stable or sustainable situation, not for the politics, as we can all see, but also not for the state of the oil market itself in terms of supply, demand and trade.”
Indeed, Iran has repeatedly insisted it will continue to control the Hormuz despite assertions to the contrary from Washington, and on Thursday its joint military command warned that all oil tankers transiting the Strait must follow routes approved by Tehran or face an “immediate and forceful response.”
The command also warned that any U.S. interference in the waterway would prompt a “rapid and decisive reaction.”