Brent crude falls to four-month low as Gulf oil flows resume

Brent crude slid below $76 a barrel Wednesday, shedding more than 35% from its April peak as tanker traffic through the Strait of Hormuz recovers.reuters
The June 17 U.S.-Iran memorandum of understanding reopened the strait and granted Iran a 60-day oil export waiver, releasing tens of millions of stranded barrels.hklaw
Despite the supply surge, analysts warn depleted global inventories — down an estimated 1.15 billion barrels during the conflict — will limit further price declines.cnn

Oil Prices Near Pre-War Levels as Hormuz Traffic Recovers

Brent crude extended its decline on Wednesday, falling below $76 a barrel for a third consecutive session as tanker traffic through the Strait of Hormuz continues to recover following the U.S.-Iran interim agreement signed on June 17. The international benchmark has now shed more than 35% from its April peak above $120, approaching levels not seen since before hostilities between the United States, Israel, and Iran escalated in late February.

A Flood of Stranded Barrels

The memorandum of understanding between Washington and Tehran calls for the “immediate and permanent” termination of military operations and the reopening of the strait, which handles roughly 20% of the world’s petroleum supply. Iran also received a 60-day waiver to export crude under the terms of the deal.hklaw

The reopening is unleashing a wave of supply. Kpler analyst Muyu Xu estimated on June 17 that approximately 93 million barrels of non-Iranian oil had been stranded in the Persian Gulf during the closure, while an additional 72 million barrels of Iranian crude sat on tankers west of Chabahar. UBS said it expects nearly 80% of disrupted supply to return within three months and around 90% by year-end.usnews

Physical crude markets reflect the glut. Reuters reported Tuesday that cash Dubai traded at a discount of 27 cents per barrel, a collapse from premiums exceeding $60 in March. North Sea Forties crude fell to a $1-per-barrel discount to dated Brent on Monday, its weakest since November and far below an all-time premium of $21.50 reached in April. Asian refiners, meanwhile, have slowed purchases of Middle Eastern crude after covering near-term needs over the past three weeks, deepening contango in regional benchmarks.reuters

Depleted Reserves Limit Downside

Despite the short-term surplus, analysts caution that a sustained return to pre-war price levels of $60–70 per barrel is unlikely. CNN reported that global supply diminished by 1.15 billion barrels during the roughly four-month conflict, while U.S. strategic petroleum reserves fell to their lowest level since 1983. Macquarie forecasts Brent will average about $77 per barrel in 2026 before declining to $64 in 2027, and Fitch Ratings projects the market will not return to oversupply until September.reuters

“Even if the global oil market were to produce nearly 5 million additional barrels more than demand, it would take around a year to recover the 1.15 billion barrels of lost supply,” CNN reported, citing International Energy Agency forecasts.cnn