Oil prices were little changed in thin trading as the recovery of Persian Gulf flows fomented a new surplus in key parts of the global market.
OPEC crude production rose by 2.34 million barrels a day in June as Persian Gulf members restored exports through the Strait of Hormuz, with the gains driven by Kuwait, Saudi Arabia and Iran, according to a Bloomberg survey.
Exports from Saudi Arabia have surged to 90 per cent of their pre-war level, mirroring a rebound in the United Arab Emirates. Iraq, among the hardest hit by the crisis, is finally showing signs of recovery, while a hoard of Iranian oil is also building up at sea.
Meanwhile, the US and Iran have held positive discussions in Qatar to convert their interim 60-day truce into a lasting settlement.
Brent futures traded just above $72 a barrel, while West Texas Intermediate was below $69, with volumes depressed due to the US Independence Day holiday. Both benchmarks have erased their war-time rally in their biggest quarterly slump since 2020.
Brent’s prompt spread has been in a bearish contango price structure for much of this week, with discounts on the nearest contracts signaling oversupply. Price differentials for cargoes in many regions are also languishing. Citigroup Inc. predicted the global benchmark could extend declines to $60 a barrel by year-end.
“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 to $65 a barrel by the turn of the year.”
On the other hand, technical signals suggest the selloff could have run its course. Brent’s 14-day relative strength index has fallen below 30, indicating futures may have been oversold.
“The US-Iran process remains fragile and disputes over Hormuz administration and transit fees persist,” the Citigroup analysts said.
President Donald Trump said during an interview with CNBC that the US is still negotiating with Iran, and claimed the Islamic Republic “has agreed to just about everything we need.”
Diplomats offered to unfreeze billions of dollars of the nation’s funds held overseas in exchange for Tehran renouncing its claim over Hormuz and toll payments, but the Islamic Republic isn’t budging, the Wall Street Journal reported, citing people familiar with the discussions.
Sticking points including Tehran’s nuclear program and an end to fighting in Lebanon still stand to complicate discussions for a more permanent accord. Some European nations now believe that fees for transiting Hormuz are inevitable and ships making the crossing will have to pay Iran and Oman, according to people familiar.
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Published on July 4, 2026
