Oil Wavers, Supply Begins to Pressure
Oil prices fluctuated within a narrow range on Monday (June 7th). The market continued to monitor the ongoing flow of shipments through the Strait of Hormuz, while OPEC+ signaled that it would increase supply in the near future.
Brent was trading below US$72 per barrel, while West Texas Intermediate (WTI) was hovering around US$69 per barrel. Oil and gas shipments through the US-protected Strait of Hormuz are starting to show signs of recovery, after several vessels had previously turned around and taken detours.
Meanwhile, OPEC+ agreed to increase production quotas for next month. Seven countries, led by Saudi Arabia and Russia, agreed to increase production by 188,000 barrels per day. Although this additional supply has not yet fully reached the market, the decision indicates that producers are preparing to increase production as conditions in the region improve.
Brent prices had previously fallen by around 30% in the second quarter after the United States and Iran agreed to a temporary peace deal. The agreement paved the way for the restoration of shipping flows through the Strait of Hormuz. Given these conditions, several Wall Street banks predict that oil prices are still at risk of falling further, with Citigroup even seeing a return to around US$60 per barrel by the end of the year.
Major producers in the Persian Gulf are also starting to rapidly increase exports. Saudi Arabia is said to have already shipped oil close to pre-war levels, while the United Arab Emirates is also restoring its shipments. Market participants are now awaiting official selling prices from Saudi Arabia, the UAE, and other producers to see how aggressively they will bring supply back to the market.
At 11:02 a.m. Singapore time, Brent for September fell 0.4% to US$71.80 per barrel. Brent briefly touched US$70.14 on July 2, its lowest level since February. Meanwhile, WTI for August was at US$68.53 per barrel. The price structure of Brent and Dubai crude has also shifted into a contango pattern, which typically indicates a tightening of short-term supply. (asd)
Source: Newsmaker.id
