Brent and WTI both sink to four-month lows as Hormuz traffic nears normal and Iran prepares to ramp up exports.
Oil just gave back everything the war added. Brent and WTI dropped to levels not seen since before the Iran conflict began, as supply from the Middle East comes roaring back faster than anyone expected.
Key details
Brent crude for August delivery fell $1.08 (1.46%) to $72.66 a barrel. WTI dropped 84 cents (1.19%) to $69.50. Both hit their lowest point since February 27.
U.S. Energy Secretary Chris Wright said flows through the Strait of Hormuz are nearly back to pre-war levels, with over 20 million barrels exiting the strait in just the last 24 hours. Full normalization is still weeks away, since the strait still needs to be cleared of mines.
UBS analyst Giovanni Staunovo noted the rebound is mostly outbound traffic so far. Getting ships moving back in will take more time, more safety guarantees, and lower insurance costs.
Iran is also expected to boost output now that U.S. sanctions have been temporarily eased, adding even more crude to a market that’s already loosening up.
Market reaction
Both benchmarks slid in early trading and stayed under pressure through the session, with traders pricing in a clear supply glut over the months ahead. UBS trimmed its Brent forecast to $85 for September and December, and $80 for early-to-mid 2027.
For traders, this is a textbook supply-driven selloff. War premium is unwinding fast, and unless something disrupts the flow again, prices may stay under pressure into the second half of the year.
What to watch next
Watch Iraq’s next move. Sources say it’s weighing an OPEC exit if its quota isn’t raised, following the UAE’s surprise departure earlier this year. Any cracks in OPEC unity could shake prices just as supply concerns ease.
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Source: Reuters
