Oil prices experienced small gains on Thursday, July 2, as buyers aimed to secure supplies ahead of the long US Independence Day weekend. Brent futures settled at $71.80 a barrel, up $0.23 or 0.32%, while US West Texas Intermediate (WTI) crude finished at $68.69 a barrel, up $0.11 or 0.16%. These slight increases followed a period where both benchmarks hit their lowest levels since the US-Israeli war on Iran began in late February. For the week, Brent was down 0.60% and WTI down 0.78%.
The market's attention has largely turned to the surge in crude flows through the Strait of Hormuz. At least five supertankers, carrying a total of 10 million barrels of Saudi oil from Ras Tanura, have exited the Strait, facilitated by Saudi Aramco's switch to spot pricing to expedite sales in Asia. A US official indicated that commercial shipping through the Strait, aided by American military support, has boosted oil flows to over 10 million barrels per day. This marks a significant increase from the lows experienced during the conflict, though still below the pre-war average of 18-19 million barrels per day that transited the waterway.
Analysts are adjusting their outlooks amid these developments. UBS cut its Brent forecasts, reducing its third-quarter estimate by $25 per barrel to $80 and its fourth-quarter forecast by $10 per barrel to $80. Its 2027 outlook was trimmed by $10 per barrel to $75, attributing these changes to the increased shipping through the Strait of Hormuz. HSBC analysts, however, anticipate that the market can absorb the returning Middle East barrels, especially as the International Energy Agency's (IEA) strategic stock releases conclude in July. They project that as the near-term "mini-glut" subsides, Brent could return to $80 per barrel or higher.
