Key Moments
- Brent and WTI futures traded near levels last seen before U.S.-Israeli strikes on Iran, with both benchmarks hitting their lowest since February 27.
- Clearing vessel backlogs and recovering flows through the Strait of Hormuz increased near-term supply, pressuring both futures curves and physical crude prices.
- UBS cut its Brent forecasts, while Goldman Sachs said it does not expect a large increase in Iranian output even if sanctions relief continues beyond August 21.
Futures Extend Losses to Pre-Conflict Levels
Oil futures were weaker on Thursday, retreating to ranges last seen before the start of the Iran war as recovering supplies from the Middle East weighed on prices despite ongoing demand concerns.
Prompt-month Brent crude futures for August delivery fell 25 cents, or 0.34%, to $73.49 a barrel by 1327 GMT. U.S. West Texas Intermediate (WTI) futures declined 24 cents, also 0.34%, to $70.10 a barrel.
Both benchmarks touched their lowest levels since February 27, the session before U.S.-Israeli strikes on Iran were launched.
Market Structure Signals Ample Near-Term Supply
The Brent curve reflected signs of comfortable prompt availability. August Brent traded below the September contract, which stood at $73.83 at 1327 GMT, indicating that near-term supply conditions were relatively loose.
| Contract | Delivery Month | Price (per barrel) | Change | Change (%) | Time (GMT) |
|---|---|---|---|---|---|
| Brent | August | $73.49 | – $0.25 | – 0.34% | 1327 |
| Brent | September | $73.83 | – | – | 1327 |
| WTI | – | $70.10 | – $0.24 | – 0.34% | 1327 |
“The backlog of vessels in the Persian Gulf is being cleared which has created a wave of supply, and we see evidence of supply assets restarting soon alongside terminals restarting,” said Rystad Energy analyst Janiv Shah.
Strait of Hormuz Flows Recover as Blockade Eases
Improving export logistics through the Strait of Hormuz further underscored the growing supply picture. U.S. Energy Secretary Chris Wright told a forum that throughput was approaching levels seen before the war began, with at least 20 million barrels having transited the strait in the previous 24 hours.
He noted that full normalisation would still require a few weeks as the passage needs to be cleared of mines.
“Most of the increase in flows from the Gulf is outbound —ships exiting the Strait,” UBS analyst Giovanni Staunovo said.
Staunovo added that a substantial recovery in inbound flows would depend on a rebound in shipping confidence, including security guarantees and mine clearance, which would help bring insurance costs back to more typical levels.
Iranian Supply Outlook and Physical Market Impact
The combination of rising Middle Eastern exports and expectations that Iran is set to raise its crude sales after receiving a temporary reprieve from U.S. sanctions pushed down prices for physical cargoes worldwide.
Goldman Sachs said it does not anticipate a large increase in Iranian production, even if sanctions relief remains in place beyond the August 21 expiry.
On the demand side, the bank said China is likely to stay the primary buyer of Iranian barrels, as European Union and British restrictions on Iranian oil and vessels continue to apply.
War Accord Opens Shipping Lane, but Risks Linger
An accord reached last week to halt the war enabled the restart of shipping through the Strait of Hormuz, which Iran had effectively blockaded.
The agreement established a 60-day window for negotiations on more contentious issues, including Iran’s nuclear program.
Wright said oil shipments would keep moving through the strait even if the accord failed to hold, and that Iran would not be able to impose another closure.
Strategist Views and Price Forecast Revisions
The shifting supply-demand landscape prompted forecast revisions from UBS. The bank lowered its Brent price projections to $85 per barrel for end-September and end-December, and to $80 per barrel for end-March and end-June 2027.
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