Oil prices remain at their lowest levels since March amid US-Iran talks

The global oil market continues to be under pressure after the start of the negotiation process between the US and Iran. The achievement of preliminary agreements on a ceasefire and the resumption of dialogue contributed to the reduction of geopolitical tensions around the Strait of Hormuz and was one of the main factors in the fall in oil prices.

 

Last week, the US and Iran signed an online memorandum of understanding to end the truce and begin talks, which initially led to the resumption of shipping through the Strait of Hormuz and a sharp drop in oil prices. The sides then exchanged new threats and the Islamic Revolutionary Guard Corps again restricted ship traffic through the strait, temporarily returning tensions to the market.

 

However, over the weekend, US and Iranian delegations, mediated by Pakistan and Qatar, held talks in Switzerland on Iran's nuclear program. Following the meeting, the parties agreed on a mechanism to ensure the safe passage of ships through the Strait of Hormuz. This was the first concrete result after almost 18 hours of negotiations and was positively received by market participants.

 

August Brent crude futures fell 10% last week to $80.5/barrel, their lowest level since early March. Over the past month, they have lost 24%. At the start of today's trading in Asia, prices continued to decline by another 1% to $79.5/barrel.

 

According to the analytical agency Kpler, on Thursday alone, after the agreements were reached between the US and Iran, at least 25 vessels passed through the Strait of Hormuz, including 20 oil tankers.

 

The further resumption of navigation through the Strait of Hormuz could facilitate the release of more than 100 loaded oil tankers currently in the Persian Gulf, which would mean a significant increase in global oil supply in the coming weeks.

 

An additional signal for the market was data from Vortexa, according to which the volume of crude oil stored on tankers for more than seven days decreased by 6.9% to 76.50 million barrels in the week to June 12.

 

Amid the improving situation, Goldman Sachs revised its forecast for Brent crude prices in the fourth quarter, lowering it from $90 to $80/barrel. The bank also expects oil exports from the Persian Gulf countries to return to pre-war levels by the end of July, a month earlier than previously forecast.

 

Despite the overall pressure on quotes, analysts believe that the level of around $80/barrel may remain an important support point. Lower prices will encourage importing countries to more actively replenish strategic reserves, which will partially offset the increase in supply.

 

According to the EIA report, as of June 12, U.S. crude oil inventories were 6.1% below the five-year seasonal average, and gasoline inventories were 6.4% below average.

 

Meanwhile, US oil production rose 0.1% to 13.806 million barrels per day in the week to June 12, just shy of the all-time high of 13.862 million barrels per day set on November 7. However, domestic supplies remain tight due to high export volumes, and the resumption of cheaper oil from the Persian Gulf could reshape global energy flows in the coming months.