Oil Steady as Oversupply Concerns Return
Oil prices were steady at the start of the week after rising for two consecutive sessions. The market continued to monitor shipping flows through the Strait of Hormuz, while OPEC+ signaled plans to increase supply. This raised fresh concerns that the global oil market could face oversupply.
Brent held near US$72 per barrel, while West Texas Intermediate, or WTI, traded above US$69 per barrel. Oil and gas shipments through a U.S.-protected corridor in the Strait of Hormuz showed signs of recovery on Sunday. A day earlier, several vessels had made unexplained U-turns and detours in the key energy route.
At the same time, OPEC+ agreed to a modest production quota increase for next month. Seven countries led by Saudi Arabia and Russia agreed to add 188,000 barrels per day. While these additional barrels have not fully entered the market yet, the decision signals that major producers are preparing to raise output as regional conditions begin to normalize.
Brent crude previously fell about 30% in the second quarter after Washington and Tehran reached an interim peace deal. The agreement opened the way for a faster recovery in shipping activity through the Strait of Hormuz, although flows have not fully returned to normal. Against this backdrop, several Wall Street banks see room for oil prices to fall further in the second half of the year, with Citigroup warning that prices could return to around US$60 per barrel by year-end.
Major Persian Gulf producers have also been increasing production and exports rapidly. Saudi Arabia’s exports have already moved close to pre-war levels as more of its tankers pass through Hormuz. The United Arab Emirates, which left OPEC during the conflict, has also restored its flows.
Traders are now waiting for official selling prices from Saudi Arabia, the UAE, and other producers this week. These prices will provide clues on how aggressively producers plan to bring more supply back to the market. For July, Saudi Arabia cut the premium of its main crude grade to Asia to US$9.50 per barrel, down from US$15.50 in June.
At 10:19 a.m. Singapore time, Brent for September settlement rose 0.2% to US$72.27 per barrel. Brent touched US$70.14 on July 2, its lowest level since February. Meanwhile, WTI for August delivery traded at US$69.03 per barrel, up 0.5% from the previous close before the U.S. holiday.
Signs of looser near-term market conditions also appeared in the Brent and Dubai futures curves, which shifted into a bearish contango pattern. In this structure, nearby contracts trade at a discount to longer-dated contracts, often signaling ample short-term supply. Over the weekend, Iran also began a mass funeral in Tehran for late Supreme Leader Ayatollah Ali Khamenei, who was killed in a U.S. and Israeli attack on the first day of the war in late February.
Source : Newsmaker.id
