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Commerzbank Says Oil Declines With Middle East Output Closer to Pre-War Level

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Brent crude fell below US$77 a barrel as geopolitical risk premiums continued to unwind and key Middle East countries got closer to pre-Iran war production, according to a note from Commerzbank.

Oil export flows from the United Arab Emirates have recovered to 85% of pre-conflict levels, according to the International Energy Agency, while Qatar's prime minister said he expects liquefied natural gas production to normalize "within a few weeks," Commerzbank said.

Meanwhile, President Donald Trump said there is "no rush" to deploy International Atomic Energy Agency inspectors to Iran. The Senate backed ending U.S. engagement in the Iran war, while Trump directed the Department of Justice to investigate the slow adjustment of gasoline prices.

U.S. Treasuries weakened into the New York close but found support in Asian trading, said the bank.

In Asia, Japanese government bond yields rose, led by the long end of the curve, added Commerzbank. Last week's Bank of Japan minutes signaled growing support for further interest-rate increases, with one board member estimating the neutral rate at roughly 2%.

European Central Bank Governing Council member Boris Vujcic estimates eurozone inflation will remain elevated for longer, although long-term expectations remain anchored, said Commerzbank.

The European Union announced a bond issuance target of 80 billion euros for the second half of the year, to be funded via four syndicated deals and six auctions.

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