Oil prices continued their downward trend for a third consecutive session on July 1, 2026, with Brent crude trading near $71 per barrel and West Texas Intermediate around $68 per barrel. This decline was primarily driven by the ongoing recovery of crude exports through the Strait of Hormuz, which have surpassed 10 million barrels per day, according to U.S. officials. The market's confidence in continued shipments has grown despite recent hostilities in the region.
Adding to the downward pressure on prices, indirect negotiations between the U.S. and Iran showed signs of progress. President Donald Trump acknowledged advancements in these talks, which are seen as containing the flare-ups between the two nations. Analysts like Saul Kavonic of MST Marquee noted that prices are drifting lower as the surge of oil from the Strait coincides with Strategic Petroleum Reserve releases and curtailed demand.
Despite improvements in the export outlook, Iran reiterated its intent to maintain control over the Strait of Hormuz, highlighting that key issues, including its nuclear program and regional security, remain unresolved. The next round of talks is expected after funeral ceremonies for Iran's former Supreme Leader Ali Khamenei, who was killed in an airstrike at the start of the conflict. These ceremonies were anticipated to begin on July 4 and last several days. U.S. commercial crude inventories also played a role, falling for 12 consecutive weeks to their lowest level since March 2025, excluding the Strategic Petroleum Reserve, indicating strong domestic demand.
