Crude oil prices held on to losses after increasing traffic through the Strait of Hormuz resembled some normalcy, while talks between the US and Iran continue on the sidelines.
Brent crude trades around the $71 a barrel mark after briefly slipping below that level on Thursday, while West Texas Intermediate (WTI) or the US crude variant, remained around the $68 a barrel mark.
Oil prices have seen a sharp reversal from the $125 a barrel levels seen at the height of the war with Gulf countries ramping up production and supplies after the preliminary MoU signed between the US and Iran in mid-June.
For most of this week, exports from Saudi Arabia, the biggest producer in the region, have remained at 90% of pre-war levels. Most of its tankers go through this key waterway.
In an interview with CNBC, US President Donald Trump said that the US is still negotiating with Iran, which "has agreed to just about everything we need", but the Wall Street Journal reported that Iran is not ready to give up on controlling the Strait as well as charging tolls after the 60-day deadline is over.
Brent crude is on course to report its fourth consecutive weekly loss, which will be its longest streak since August 2024. Supplies have also been ramped up by United Arab Emirates, which is no longer part of the OPEC, as well as from Iran, who has received a waiver on sanctions as part of the MoU.
“Fundamentals are rapidly reasserting themselves as Hormuz disruptions fade” and “shipping flows are normalizing,” Citigroup Inc. analysts including Francesco Martoccia and Eric Lee said in a note on July 2. “We continue to recommend selling any summer rallies and forecast Brent reaching $60-65/bbl by the turn of the year.”
(With Inputs From Agencies)