FINWIRES · TerminalLIVE
FINWIRES

EMEA Oil Update: Oil Futures Poised for Weekly Decline as US-Iran Diplomacy Holds

By

Crude oil futures were posed for a weekly loss on Friday pressured by an increase in supply via the Strait of Hormuz as US-Iran peace talks ease geopolitical tensions.

The front-month Brent futures contract was steady at $71.82 per barrel. Murban futures edged higher 1% to $65.94/bbl. However, both contracts were headed for a weekly loss this week.

"The oil market is on target for a fourth consecutive week of declines as flows through the Strait of Hormuz increase, with ICE Brent edging closer towards $70/bbl," ING analysts said.

"The increase in oil flows is putting growing pressure on the front end of the ICE Brent forward curve. It's increasingly moving into contango, a sign of an oversupplied prompt market. The return of this supply coincides with continued SPR releases," ING said.

The supply relief stems from both Saudi Arabia and the UAE aggressively ramping up export volumes toward pre-war levels.

Bloomberg ship-tracking data revealed that 14 million barrels of crude cleared the vital Strait of Hormuz chokepoint on July 1 alone, with Saudi Arabia's flows recovering to roughly 90% of their pre-February levels.

This restoration of supply combined with ongoing US Strategic Petroleum Reserve releases, has placed intense pressure on the front end of the ICE Brent forward curve, analysts noted.

Looking ahead, investor positioning ahead of the US holiday weekend has triggered some short-covering and position squaring, stalling the immediate sell-off, market experts said.

Despite the near-term bearishness, market observers suggest a market floor may be forming.

China's independent refiners have reportedly stepped into the spot market to capitalize on deep discounts of up to $5 per barrel offered by Saudi Arabia and Kuwait under highly flexible terms to stimulate sales.

Related Articles

Oil & Energy

US Oil Update: Crude Steadies as Hormuz Exports Recover, US-Iran Talks Advance

Crude oil futures held firm in after-hours trading on Thursday as crude exports through the Strait of Hormuz continued to recover and indirect talks between the US and Iran showed signs of progress, easing concerns over potential supply disruptions.Front-month West Texas Intermediate crude futures eased 0.17% to $68.46 per barrel, while Brent futures were up 0.04% to $71.60/bbl.Gelber & Associates said that WTI crude is trading at $68.10/bbl, down $0.48/bbl and about 0.70% over the day, as the market holds near pre-conflict levels while traders balance improving Middle East supply access against lingering demand concerns.US commercial crude oil inventories decreased by 3.8 million barrels to 408.4 mmbbls in the week ended June 26, the Energy Information Administration said in its weekly report on Wednesday.US Strategic Petroleum Reserve inventories dropped to 325.7 mmbbls for the week ended June 26, down from 331.2 mmbbls a week ago, marking a weekly decline of 5.5 mmbbls, EIA data showed.Saxo Bank strategists said that, combined with ongoing releases from the Strategic Petroleum Reserve and demand curtailed by recent high prices, the market remains exposed to a short-term supply glut.On Wednesday, mediators from Qatar and Pakistan concluded separate meetings with US and Iranian negotiators in Doha, Majed Al Ansari, Qatar's foreign ministry spokesperson, said in a social media post on X.Al Ansari said "positive progress" was made on issues related to the memorandum of understanding.The next meeting between Iran and US negotiators will take place after the July 9 funeral processions for Iran's late Supreme Leader Ayatollah Ali Khamenei.President Trump said on Wednesday that the US was getting along very well with Iran and that recent meetings in Qatar went well.Trump said the two sides had very constructive meetings, "and we'll see how it develops," adding that crude prices have come down significantly, now at about $68/bbl.Alexandre Andlauer, senior global energy analyst at Kpler, said that crude extended its post-MoU rout as accelerating Hormuz transits and clearing stranded barrels pushed Dubai deeper into contango and Brent into the mid-$70s.However, the US and Iran have yet to iron out a permanent peace deal.Meanwhile, traffic through the Strait of Hormuz continued despite tensions over the weekend, with Soojin Kim, a research analyst at MUFG, saying crude shipments through the waterway have recovered to over 10 million barrels per day.Iran's military warned that interference in the Strait will receive a 'swift and decisive response'.The Strait of Hormuz is not a "playground" for the US, but falls under the "indisputable sovereignty of the Islamic Republic of Iran," the military command said, adding that the security and stability of the key chokepoint are a red line.

Oil & Energy

Market Chatter: Kuwait Boosts June Oil Production After US-Iran Peace Deal

Kuwait's crude oil production surged to 1.65 million barrels per day in June, up from 580,000 b/d the previous month, as the OPEC member ramps up exports following a US-Iran peace deal, Reuters reported Thursday, citing industry sources.The increase indicates that oil flows through the Gulf are rebounding after disruptions caused by the Middle East conflict. Cargoes stranded during the conflict are also gradually clearing the Strait of Hormuz, as major Gulf exporters restore production levels.Kuwait Petroleum Corporation did not immediately respond to' request for comment.Kuwait produced about 2.5 million b/d before Iran effectively closed the Hormuz in late February. The disruption forced Kuwait, alongside other major Gulf producers including Saudi Arabia and Iraq, to slash millions of barrels per day of crude output.Kuwait was among the most severely impacted producers in the region due to its heavy reliance on the strategic waterway for its crude exports.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

Oil & Energy

EMEA Oil Update: Crude Falls After US, Iran Conclude Peace Talks in Doha

EMEA crude futures tumbled for a third consecutive session in after-hours trading on Thursday, as the US and Iran concluded peace talks in Doha with an agreement aimed at easing the Middle East conflict and easing concerns over potential supply disruptions.Brent crude futures retreated by 0.64% to $68.14 per barrel, while Murban crude futures tumbled by 2.3% to $64.15/bbl.Saxo Bank strategists said that Brent extended its slide towards pre-war levels as flows through the Strait of Hormuz continued to recover, while signs of progress in US-Iran talks further eased supply risks.On Wednesday, mediators from Qatar and Pakistan concluded separate meetings with US and Iranian negotiators in Doha, Majed Al Ansari, Qatar's foreign ministry spokesperson, said in a social media post on X.Al Ansari said "positive progress" was made on issues related to the memorandum of understanding.The next meeting between Iran and US negotiators will take place after July 9, the funeral processions for Iran's late Supreme Leader Ayatollah Ali Khamenei.Earlier on Wednesday, President Trump said that the US was getting along very well with Iran and that recent meetings in Qatar went well.Trump told reporters that the two sides had very constructive meetings, "and we'll see how it develops," adding that crude prices have come down significantly, now at about $68/bbl.The renewed push for a permanent peace deal follows tit-for-tat military strikes between the US and Iran over the weekend, which threatened to jeopardize a 60-day truce between the two countries.Alexandre Andlauer, senior global energy analyst at Kpler, said that crude extended its post-MOU rout as accelerating Hormuz transits and clearing stranded barrels pushed Dubai deeper into contango and Brent into the mid-$70s.Traffic through the strategic waterway continued despite tensions over the weekend, with 34 verified crossings recorded on June 30, according to Kpler, with traffic evenly balanced at 17 vessels in each direction.Soojin Kim, research analyst at MUFG, said crude shipments through the waterway have recovered to over 10 million b/d, while UAE exports have returned to pre-war levels, reinforcing expectations of improving regional supply.Meanwhile, Iran's military warns that interference in the Strait will receive a 'swift and decisive response'.The Strait of Hormuz is not a "playground" for the US, but falls under the "indisputable sovereignty of the Islamic Republic of Iran," the military command said, adding that the security and stability of the key chokepoint are a red line.OPEC+ countries are set to agree on a further output hike from August, when the producer group meets on Sunday, adding supply at a time of falling prices amid the gradual reopening of the Strait of Hormuz.