Oil Edges Higher as Markets Watch US-Iran Talks
Oil prices edged higher after posting their biggest quarterly decline since the pandemic, as traders monitored ongoing peace talks between the United States and Iran and the recovery of shipping activity through the Strait of Hormuz.
Brent crude traded above $73 per barrel after falling by nearly one-third over the past three months. West Texas Intermediate, or WTI, hovered near $70 per barrel. The limited rebound came as investors assessed whether diplomatic efforts could reduce the risk of energy supply disruptions from the Middle East.
US envoys Jared Kushner and Steve Witkoff reportedly held positive discussions in Qatar, while technical talks with Iran continued to move forward. The two officials were in Doha for indirect talks aimed at easing tensions around the Strait of Hormuz, a crucial waterway linking Persian Gulf producers to global markets.
Samantha Dart, Co-Head of Global Commodities Research at Goldman Sachs, said markets have not reacted strongly to recent flare-ups in the Strait of Hormuz because US energy exports and Chinese imports have remained relatively consistent. This suggests that the oil market is still moving toward a more stable direction.
Crude prices have weakened in recent days as the warring parties continued discussions toward a more lasting agreement. Although recent attacks around Hormuz have complicated negotiations, oil tanker traffic is now showing signs of recovery after the United States and Iran exchanged strikes over the weekend.
Dart said she expects the conflict to be resolved by the end of July. Once flows through the Strait of Hormuz normalize, the market is likely to shift toward expectations of oversupply. A return to normal energy flows from the region could remove the geopolitical risk premium that previously supported oil prices.
Morgan Stanley has also warned of a looming oil glut. The bank said shipping through the Strait of Hormuz is recovering faster than expected, while US supply remains strong and Chinese demand is weak. Morgan Stanley has cut its oil price forecasts for the second time in about two weeks.
The market is also facing additional supply from other sources. Iran said it has exported more than 40 million barrels of oil since the US lifted its naval blockade. At the same time, Russian oil shipments have surged to record levels, creating a major buildup of barrels at sea.
Still, geopolitical risks have not fully disappeared. Iran has reiterated its determination to control maritime traffic through the Strait of Hormuz. The statement is a reminder that key issues, including Iran’s nuclear program and an end to fighting in Lebanon, could still complicate talks during the 60-day ceasefire window.
Brent for September settlement rose 0.7% to $73.45 per barrel in morning trade in Singapore. WTI for August delivery gained 0.9% to $70.11 per barrel.
Overall, the latest rise in oil prices remains limited and appears more like a rebound after a sharp decline. If US-Iran talks continue to improve and Hormuz traffic normalizes, oil prices may face renewed pressure from potential oversupply. However, if tensions escalate again, the geopolitical risk premium could return and lift prices in the short term.
Source: Newsmaker.id
