Brent crude oil has dropped below $72.48 a barrel, marking its lowest point since before the US-Iran war began in late February. This decline, which occurred over four consecutive sessions, indicates a significant shift from concerns of a shortage to an oversupply in key market segments. Buyers are now facing abundant offers from both the Middle East and Africa, reversing earlier market dynamics and leading to widespread price weakness.
The decrease in oil prices is directly linked to the resumption of shipments through the Strait of Hormuz, a vital chokepoint that was disrupted during the conflict. US Energy Secretary Chris Wright confirmed that flows through the strait are nearing pre-war levels, with more than 20 million barrels exiting in a 24-hour period. This recovery in traffic has eased supply concerns and contributed to the downward pressure on oil prices, with Brent prices falling over 3% to $74.52 a barrel at one point.
The US is actively working to shore up support for a preliminary deal with Iran, with Secretary of State Marco Rubio touring Gulf allies. This deal aims to ensure the unimpeded passage of vessels through the Strait of Hormuz, which historically accounts for about one-fifth of global oil and liquefied natural gas flows. Despite Iran's Revolutionary Guards warning vessels to stick to Tehran's designated routes and rejecting newly announced lanes by Oman and the UN, the increased transit activity has significantly alleviated market tension.
While the UN's International Maritime Organization paused its evacuation plan after a vessel was hit, 57 ships carrying around 1,100 seafarers had already transited the strait between June 23 and the incident. Data from Lloyd’s List Intelligence shows 125 vessels crossed the strait last week, a substantial increase from 33 the week prior. This surge includes crude, chemical, container, bulk, and general cargo vessels.
Looking ahead, J.P. Morgan has adjusted its second-half 2026 Brent crude oil price forecast downwards, now expecting Brent to average $86 per barrel in the third quarter and $80 in the last quarter. This revision is based on lower-than-expected draws in OECD commercial inventories and softer demand projections, further reinforcing the outlook for suppressed oil prices amid increased supply.
