Summary
- The Brent crude oil futures contract fell 1.3% to $72.88 a barrel on Thursday, a level below the prewar price before the U.S.-Iran conflict began.
- Transits of Middle Eastern crude through the Strait of Hormuz rose to about 4.9 million barrels per day so far in June, up from depressed wartime levels but still well below the 2025 average of roughly 13 million barrels per day, according to data provider Kpler.
- Analysts at Goldman Sachs said the market is “extrapolating the swift, thus far, recovery of Mideast supply” and pricing in expected future surpluses, while also eroding the long-term “security premium” embedded in oil prices.
- U.S. commercial crude oil inventories fell for a ninth consecutive week, down by 6.1 million barrels, according to the Energy Information Administration.
- HSBC economists cautioned that “a range of hurdles” remain, including mine-clearing in shipping lanes, with only two lanes deemed safe so far.
Oil prices fell to levels not seen since before the U.S.-Iran conflict erupted in late February, as tanker traffic through the Strait of Hormuz accelerated and a wave of supply trapped inside the Persian Gulf for months began returning to global markets.
The most actively traded Brent crude futures contract, which expires in July, fell 1.3% to $72.88 a barrel in midmorning European trading on Thursday. The U.S. oil benchmark, West Texas Intermediate, was down 1.2% to $69.44 a barrel. Both benchmarks have fallen nearly 30% so far in June. A barrel of Brent crude traded at $72.48 before the conflict began in late February, meaning prices have now slipped below that prewar reference point.
The reopening of the strategic waterway and a U.S. waiver on Iranian oil sales, part of an interim deal between Washington and Tehran, have marked a turning point for Gulf crude markets, according to the Wall Street Journal.
Transits of Middle Eastern crude through the Strait of Hormuz have risen to about 4.9 million barrels a day so far in June, according to data provider Kpler. That figure remains well below the 2025 average of roughly 13 million barrels a day, but it marks a clear rebound from the depressed levels seen during the conflict, when the waterway was effectively closed to commercial shipping.
“The market is likely extrapolating the swift, thus far, recovery of Mideast supply and already pricing expected future surpluses,” analysts at Goldman Sachs said.
The pickup in transit reflects both an increase in vessel crossings through the strait and a greater share of ships turning their tracking signals back on, according to the Journal. As MSI previously reported, the normalization of flows follows a period in which oil prices fell to $71 a barrel after President Trump said Iran was not collecting tolls from ships passing through the waterway, signaling the reopening was progressing faster than many traders had anticipated. Read more about the June 24 price decline.
Investors are also reassessing how much geopolitical risk should be built into longer-dated oil prices, according to the Goldman analysts.
“Beyond the spot-price selloff, the market is increasingly challenging its prior assumption that long-dated prices need to incorporate a sticky security premium,” the Goldman analysts said. “While supply disruption risk is high, the ability of the oil market to respond to the sharpest oil supply shock ever has been a key surprise that is likely eroding this security premium.”
Despite the sharp price declines, some analysts cautioned that the recent moves may be overdone. Even with the rebound in transit, it will take time for Gulf flows to fully normalize, and uncertainty remains over how the Strait of Hormuz will be governed going forward.
“There are a range of hurdles that need to be tackled beyond the logistical challenges of repositioning ships,” economists at HSBC said. “For instance, clearing mines in shipping lanes — so far only two lanes have been deemed safe.”
Meanwhile, U.S. crude oil inventories continue to draw. Commercial crude oil stocks excluding the Strategic Petroleum Reserve fell by 6.1 million barrels, marking a ninth consecutive week of declines, according to U.S. Energy Information Administration data cited by the Journal.