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US Oil Update: Crude Futures Dip Over 3% as Supply Resumes

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Oil prices declined more than 3% on Friday and were headed for their third straight weekly fall amid a surge in supply as transit via the Strait of Hormuz resumed and multiple oil tankers exited the strait.

Front-month West Texas Intermediate crude futures dropped by 3.2% to $69.61 per barrel, while Brent futures slumped 3.6% to $72.59/bbl.

"Oil was on track for a weekly decline after transits through the Strait of Hormuz accelerated, although an attack on a cargo ship by an unknown projectile has renewed concerns about safe passage through the vital waterway," Saxo Bank analysts said.

Market bears largely shrugged off a fresh maritime security incident on Thursday when the Singapore-flagged container ship Ever Lovely was struck by an unknown projectile 7.5 miles off the coast of Oman.

While the UK Maritime Trade Operations report briefly renewed safety concerns and shook crew confidence, commercial vessels continued their transits through Friday.

Meanwhile, Saudi Arabia is expected to reduce its crude oil official selling prices for Asian buyers next month following a decline in spot crude markets, according to a Reuters survey of industry sources published Thursday.

On the supply side, daily production at Karachaganak oil and gas field in Kazakhstan dropped by 9,000 metric tons after a Ukrainian attack damaged Russia's Orenburg Gas Processing Plant, which receives feed from the field, several media outlets reported.

Saudi Aramco reportedly resumed crude oil loading at its giant Ras Tanura export terminal, marking Aramco's return to Persian Gulf exports after a four-month suspension.

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US Oil Update: Futures Mixed as Markets React to Hormuz Risks

Crude oil futures diverged in after-hours trading on Thursday as markets assessed shipping flows through the Strait of Hormuz amid ongoing concerns about vessel safety in the strategic waterway following an incident involving a cargo ship off the Omani coast.Front-month West Texas Intermediate crude futures shed 0.5% to $71.45 per barrel, while Brent futures were up 1.1% to $74.84/bbl.Gelber & Associates said traders are shifting focus to upcoming OPEC+ guidance and US inventory data, both of which could determine whether the recent correction has run its course or if additional downside remains.US commercial crude oil inventories decreased by 6.1 million barrels to 412.1 mmbbls in the week ended June 19, the Energy Information Administration said in its weekly report on Wednesday.Crude inventories are now about 7% below the five-year average for this time of year, the EIA said.Fuel inventories rose, with gasoline stocks rising by 2.1 million barrels last week, while distillate increased by 3.1 million barrels, the agency said.On Thursday, the maritime group UKMTO reported a vessel had been struck by an unknown projectile in the Hormuz off the coast of Oman, stoking concerns among traders about maritime safety as the US and Iran seek to end the conflict permanently.The incident came a day after Iran's Islamic Revolutionary Guard warned vessels that any new transit route via the Hormuz established without coordination with Tehran is "unacceptable and dangerous".The IRGC Navy said that coordination with Iran's Navy is "mandatory" for transit through the strategic waterway.Meanwhile, the International Maritime Organization suspended its evacuation operations in and around the Strait of Hormuz following an attack on a commercial vessel in the Gulf of Oman, citing the need to reassess safety conditions amid rising regional risks.IMO Secretary-General Arsenio Dominguez said the suspension was prompted by the need to "reconfirm that the necessary safety guarantees continue to be in place" for both vessels on the evacuation list and others operating in the region.Soojin Kim, a research analyst at MUFG, said that although uncertainties persist over issues such as Iran's nuclear program, shipping fees through the Strait of Hormuz, and sanctions implementation, the market is increasingly pricing in a sustained normalization of supply.Meanwhile, the latest shipping data shows that more commercial vessels are transiting the strategic waterway with their satellite signals switched on, with Kpler reporting 70 verified crossings on June 24 since the US and Iran reached an agreement to reopen the waterway.Kpler analysts said that the US-Iran framework and the lifting of the US blockade appear to have provided a short-term confidence boost, although Iran's Islamic Revolutionary Guards warned that using the Omani route could create a new source of contention.On the supply front, Rystad Energy strategists projected that shut-in production across the Gulf region had fallen to 9.6 million barrels per day in mid-June, down from 11.7 million b/d just three weeks ago.The analysts said the US-Iran peace deal, the US sanctions waiver on Iranian crude exports, and Gulf producers reporting restart timelines ahead of earlier estimates have shifted the supply outlook in quick succession.

Oil & Energy

Middle East Oil Supply to Recover Faster Than Expected by End of 2026, Rystad Energy Says

Middle East oil supply is recovering faster than expected and could return to pre-conflict levels by the end of 2026, Rystad Energy said in a note on Thursday, citing improving Gulf production and easing supply disruptions.Brent crude traded near $73 per barrel, close to a three-month low, as the market priced in a quicker recovery.Rystad estimated shut-in production across the Gulf fell to 9.6 million barrels per day in mid-June from 11.7 million b/d three weeks earlier.The firm attributed the faster recovery to a preliminary US-Iran agreement reached on June 17, a 60-day US sanctions waiver for Iranian oil exports and earlier-than-expected production restart plans across the Gulf."Two million barrels a day came back online in three weeks, and the recovery is spread across the region," said Aditya Saraswat, MENA research director at Rystad Energy.He noted that Iran is leading the rebound, Kuwait has resumed its July cargo tenders after lifting force majeure, and Saudi Arabia is on track to reach a record 4.5 million b/d of Yanbu exports this month."Storage tanks across the Gulf are around 50% to 60% full, so if tanker traffic through the strait does not pick up in the near term, producers will need to throttle back output, and the full recovery moves into next year," Saraswat added.Rystad expects regional outages to fall below 2 million b/d by the end of Q3, with production returning to pre-conflict levels by December.Saudi Arabia and the UAE account for about 65% of current regional production and kept exports flowing through pipeline routes during the conflict.Iran is recovering more quickly because its production shutdown was shorter and upstream damage remained limited, while Kuwait and Iraq face a slower restart.The US Treasury's decision to suspend Iranian oil sanctions from June 22 through Aug. 21 has opened the door for a faster recovery.Rystad expects Iran's oil production to increase from the current 2.4 million b/d to 3.1 million b/d by August and to 3.3 million b/d by year-end if sanctions relief continues.Saudi Arabia's 7 million b/d East-West pipeline helped maintain exports during the conflict. Shipments through Yanbu increased from less than 1 million b/d before the conflict to 3.3 million b/d in March, 4 million b/d in April and are on track to reach a record 4.5 million b/d in mid-June.The UAE is expanding the Habshan-Fujairah pipeline to increase bypass capacity from 1.8 million b/d to 3.3 million b/d by around 2027.Adnoc also plans to raise crude production capacity to 5 million b/d next year from 4.85 million b/d, with a longer-term target of 6 million b/d.Rystad said the pace of tanker movements through the Strait of Hormuz will determine whether the recovery stays on schedule.If shipping fails to normalize in the near term, the firm expects the region's production recovery to slip back into 2027.The Middle East has recovered from every major supply disruption over the past 60 years, including the Arab oil embargo, the Iran-Iraq war and the invasion of Kuwait.Rystad added the current recovery is already underway despite the region's largest recorded supply shock.

Oil & Energy

IMO Halts Strait of Hormuz Evacuations After Gulf of Oman Attack

The International Maritime Organization suspended its evacuation operations in and around the Strait of Hormuz following an attack on a commercial vessel in the Gulf of Oman, citing the need to reassess safety conditions amid rising regional risks.IMO Secretary-General Arsenio Dominguez said the suspension was prompted by the need to "reconfirm that the necessary safety guarantees continue to be in place" for both vessels on the evacuation list and others operating in the region.The decision follows a reported attack on a vessel in the Gulf of Oman. Though the targeted ship was not part of the IMO's organized transit framework, the incident prompted officials to pause the evacuation program to re-evaluate safety protocols."I have always reiterated that the safety of the seafarers remains paramount," Dominguez said in a statement. "Therefore, to ensure a coordinated approach and navigational safety, the evacuation plan will be paused until further clarity is obtained."Earlier this week, the IMO launched the evacuation plan in collaboration with member states and industry stakeholders, successfully moving a portion of the fleet out of the Hormuz.Dominguez said the evacuation plan would remain on hold until further clarity is obtained on the security situation, stressing the risk to thousands of seafarers still stranded in the Persian Gulf amid the ongoing geopolitical tensions.