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US Oil Update: Futures Steady as Hormuz Flows Recover, US-Iran Talks Show Progress

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Crude oil futures were little changed in midday trading on Thursday as a surge in crude flows via the Strait of Hormuz coincided with signs of progress in indirect talks between the US and Iran in Doha.

Front-month West Texas Intermediate crude futures eased 0.15% to $68.48 per barrel, while Brent futures slipped 0.08% to $71.51/bbl.

Gelber & Associates said that progress in US-Iran talks, the resumption of tanker movements, and improved expectations for regional exports have reduced the urgency to pay up for prompt barrels.

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.

The US-Iran indirect talks in Doha made "positive progress" on matters related to the memorandum that halted the war in June, Dr. 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.

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.

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 aggressive United States; rather, it 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.

Market participants will be closely following OPEC+'s meeting over the weekend, where the producing group is expected to hike output from August, adding supply at a time of falling prices amid the gradual reopening of the Hormuz.

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