Price Trend Summary

Week One: Progress in US-Iran Talks Gradually Erases the Wartime Shortage Premium

Early in the period, oil prices fell rapidly as progress in US-Iran negotiations significantly eased market concerns about Middle East supply disruptions. On 6/23, reports emerged that US-Iran talks had entered their final stage, and the US simultaneously issued a 60-day license for Iranian oil sales, helping restore normal transit through the Strait of Hormuz. This caused the geopolitical risk premium that had built up to fade quickly, and combined with expectations that Iranian oil exports would rise in the near term, the market anticipated a gradual increase in global crude supply, further weighing on prices.

Prices continued to fall in the middle of the period, completely erasing the risk premium accumulated since the war began and returning to pre-conflict levels. 6/25 saw the sharpest single-day decline of the week. As tanker transit through the Strait of Hormuz resumed and international maritime authorities provided safety assurances, the Brent front-month spread flipped into a slight contango, reflecting market expectations of ample future supply.

Later in the period, an attack on vessels near the Strait of Hormuz renewed market concerns over the safety of Middle East energy transport, and oil prices ended their multi-day decline and began to rebound on 6/26. However, since the US-Iran peace agreement was still moving forward, the rebound was limited, indicating the market's bearish outlook on prices had not changed. By 6/27, prices weakened again as shipping through the Strait of Hormuz returned to normal, Persian Gulf crude exports recovered to near pre-war levels, and Middle East producers such as Saudi Arabia gradually increased supply. The market once again expected global crude supply to keep improving, and bearish supply-side factors regained dominance over price direction.

Week Two: Easing Supply-Side Pressure Weighs on Oil Prices

This week, as shipping through the Strait of Hormuz continued to normalize and the market confirmed an accelerating supply-side recovery, optimism quickly turned into selling pressure. On 7/1, Brent crude briefly fell below $70, returning to levels last seen before the conflict erupted in February.

Week Three: Military Conflict Risk Outweighs Bullish Supply Increases, Driving a Sharp Price Surge

Early in the week, prices edged lower, mainly because OPEC+ decided to continue raising crude production starting in August, and Saudi Arabia sharply cut its official selling price for Arab Light crude to Asia for August. In addition, shipping through the Strait of Hormuz continued to normalize, significantly easing market concerns over supply disruption. At the same time, UAE crude production climbed to a historic high, reinforcing expectations of looser supply, and the Suez Canal route gradually resumed operations. The market reassessed the crude oil supply-demand balance, and prices came under pressure and declined.

Mid-week, on 7/7, three merchant vessels in the Strait of Hormuz were attacked by unidentified projectiles. The US held Iran responsible and immediately announced the revocation of Iran's temporary sanctions waiver for oil exports, and on the same day carried out airstrikes on more than 80 military targets inside Iran. On 7/8, President Trump stated at the NATO summit that the temporary US-Iran ceasefire agreement was "over," and the US military launched a second round of airstrikes that night. Iran, in turn, threatened a full blockade of the Strait of Hormuz and retaliation against US military bases in the Middle East if attacks continued. Brent crude surged 5.2%, hitting a new high since late June. On 7/9, US forces continued to strike Iranian military bases and anti-ship missile systems in southern Iran, while Iran warned of "massive retaliation" against US bases in the region. Markets began to worry that tankers would broadly avoid the Strait of Hormuz, driving up shipping insurance premiums and transport costs. WTI briefly broke above $75 intraday, while Brent held near $78, marking the week's high.

Later in the week, prices retreated from their highs, consolidating in the $75–77 range. US officials said technical-level talks with Iran continued through Qatar and Oman in an effort to avoid full-scale war, which cooled market sentiment somewhat. In addition, the UAE reported its June crude output had hit a record high, showing some OPEC members continue to raise supply, which partly offset concerns over supply disruption.

Agency Monthly Reports

This Month's Supply and Demand Forecasts from the Three Major Agencies

Unit: million barrels/day | Year | EIA Supply | OPEC Supply (Non-DoC liquids + DoC NGLs) | IEA Supply | EIA Demand | OPEC Demand (OECD) | OPEC Demand (non-OECD) | IEA Demand | | --- | --- | --- | --- | --- | --- | --- | --- | | 2025 | 106.1 (-0.30) | 62.83 (+0.0) | - | 104.0 (+0.00) | 45.95 (+0.00) | 59.21 (+0.00) | - | | 2026 | 101.9 (+2.90) | 63.59 (-0.01) | - | 102.8 (-0.10) | 46.11 (+0.10) | 59.82 (-0.30) | - | | 2027 | 109.8 (+0.50) | 64.42 (+0.10) | - | 104.8 (-0.50) | 46.32 (+0.10) | 61.54 (-0.10) | - |

EIA Short-Term Energy Outlook, July 2026

Oil Prices: Expectations of increased supply and slower inventory draws have driven oil prices down. Brent spot prices averaged $85 per barrel in June, down $22 from May and $32 below the recent high reached in April. This forecast revises the Q3 Brent average down $27 from last month's forecast, the Q4 average down $19 from June's forecast, and the 2027 average down $15 from June's forecast. For WTI, the 2026 average is projected at $76.26, falling to $60.76 in 2027.

Global Crude Inventories: Despite the recovery in Middle East production and exports, rebuilding global inventories will take time. Global inventories are forecast to decline by an average of 5.1 million barrels/day in Q2 and by another 2.2 million barrels/day in Q3. This adjustment period is expected to last through the end of Q3, after which the market will return to the pre-conflict oversupply condition, with average inventory builds of 2.7 million barrels/day in Q4 and 5.0 million barrels/day in 2027.

Global Oil Consumption: High oil prices, fuel shortages, and government measures to curb oil use during the conflict have significantly reduced global oil demand in recent months, limiting the extent of inventory draws. Global oil consumption in 2026 is forecast to decline by an average of 1.2 million barrels/day, with 800,000 barrels/day of that decline coming from non-OECD countries. Assuming oil prices ease next year and supply flows fully normalize, demand is expected to rebound with consumption growth of 2.0 million barrels/day in 2027, 800,000 barrels/day above the 2025 average.

US Gasoline: In April and May, US gasoline inventories fell below the bottom of their five-year range due to reduced production, lower imports, and higher exports, as refiners prioritized jet fuel and diesel output to meet strong global demand. In the second half of the year, as refiners increase the share of gasoline output and global gasoline supply rises, inventories are expected to stabilize in Q4 and return to the five-year average by early 2027. However, due to elevated oil prices and economic conditions, US gasoline consumption in the second half is expected to remain below the five-year average, with some months even falling below the five-year low. This relatively weak consumption, combined with higher production and imports, should support continued inventory recovery through year-end.

US Gasoline Prices: Falling oil prices are expected to push Q3 retail gasoline prices down about 41 cents/gallon from Q2, with the average slightly below $3.80/gallon. As gasoline inventories remain tight, crack spreads are expected to widen by about 10 cents/gallon on average in Q3. As inventories rebuild and the summer demand season ends, competitive pressure is expected to significantly narrow Q4 crack spreads, with retail prices potentially falling to around $3.40/gallon, and the overall 2027 average retail gasoline price forecast falling to near $3.10/gallon.

Summary: In its July Short-Term Energy Outlook, the EIA states that the global energy market is gradually moving from the supply tightness caused by the earlier Strait of Hormuz conflict back toward a condition of ample supply. As the US and Iran reach an agreement, the Strait of Hormuz reopens, and crude transport normalizes, halted Middle East production is expected to resume, significantly increasing global crude supply. The EIA therefore expects global crude inventories to begin rising in the second half of 2026, with the market returning to oversupply in 2027.

IEA Oil Market Report, July 2026

Demand Side: Global oil demand is gradually recovering from its May low, mainly due to seasonal factors and the release of previously suppressed demand. Q2 2026 demand is estimated to have fallen 4.8 million barrels/day year-on-year, with the Q3 decline narrowing to 1.7 million barrels/day, before turning to growth of 1.2 million barrels/day year-on-year in Q4. Still, full-year demand is expected to fall 1.0 million barrels/day, with growth of 2.0 million barrels/day not returning until 2027 — a pace of growth for the next two years well below the historical average.

Supply Side: In June, global oil supply rose sharply by 4.1 million barrels as tanker traffic through the Strait of Hormuz resumed, though overall output remained about 9.4 million barrels/day below pre-war levels. Total Persian Gulf oil exports surged by 6.5 million barrels/day in June, still far below the pre-war average of 24.0 million barrels/day, with crude and condensate accounting for 85% of the increase; Gulf region output rose to 3.5 million barrels/day, still 11.4 million barrels/day below pre-war levels. The IEA estimates global supply will decline by an average of 3.7 million barrels/day in 2026, assuming the conflict cools quickly; if transit conditions continue to improve, supply could rise by 7.5 million barrels/day in 2027.

Refining and Product Markets: Global refinery runs rose by 1.5 million barrels/day in June but remained 6.0 million barrels/day below the same period last year, mainly due to Middle East export refineries not yet back online, attacks on Russian refineries, and low Asian utilization rates. Gulf region refined product and LPG exports remained less than half of pre-war levels, while crude exports had already recovered to nearly three-quarters of February levels. This has driven crack spreads and refining margins to a four-year high in early July, with gasoline crack spreads rising especially sharply. In addition, continued Ukrainian attacks on Russian refineries and export infrastructure have further tightened product markets in Russia and surrounding regions.

Inventories: Global crude inventories rose in June for the first time in four months, up 21 million barrels, mainly due to a 117 million barrel increase in floating storage that offset a roughly 96 million barrel decline in onshore inventories.

Prices: Brent crude continued to fall in June, erasing all wartime gains, with a monthly plunge of roughly $22–31 per barrel to around $68 — the lowest since January and about $2 below pre-war levels, driven by increased Gulf of Mexico tanker volumes and a market shift in focus toward an "oversupply" outlook. However, prices rebounded significantly after the ceasefire agreement collapsed and conflict resumed on July 7–8.

Summary: In its July Oil Market Report, the IEA states that the market shows a "two-track" pattern of loose crude supply alongside a still-tight product market, pushing refining margins to a four-year high. However, the forecast for supply-demand to return to surplus for the full year depends heavily on continued normalization of Strait of Hormuz shipping. This week's renewed conflict in the Gulf highlights that, absent a lasting peace agreement, the market normalization process remains uncertain.

OPEC Monthly Oil Market Report, July 2026

Oil Prices: OPEC notes that as Middle East geopolitical risk eased in June, the risk premium in the international crude market has been gradually receding. The OPEC Reference Basket (ORB) average price fell $24.80 (-21.7%) month-on-month, Brent fell $18.22 (-17.8%), and WTI fell $17.09 (-17.3%).

Futures Market: As the market anticipated a return to normal Middle East crude supply, investors reduced their crude positions. Combined speculative positions in Brent and WTI futures and options fell by about 245 million barrels in June. In addition, WTI open interest fell 7.8% month-on-month, and money managers' net long positions fell 9.8%, reflecting a more cautious market outlook on future prices and a marked cooling of speculative buying.

Crude Supply and Demand: Despite falling prices, OPEC believes global oil market fundamentals remain sound. Global crude inventories continue to decline, refinery utilization is rising, and Northern Hemisphere summer travel demand is boosting gasoline and diesel consumption, keeping the spot market relatively tight. As a result, Brent and Dubai futures curves remain in backwardation, indicating tight near-term supply-demand conditions, though the degree of backwardation has narrowed from the previous month, suggesting the market expects supply to gradually improve.

Global Economy: OPEC maintained its global economic growth forecast unchanged, projecting global GDP growth of 3.1% in 2026 and 3.2% in 2027. OPEC believes that AI investment, continued expansion of global trade, and fiscal policies in major economies will continue to support global oil demand, and that further easing of Middle East geopolitical tensions would reduce energy market volatility and support steady growth in global oil demand in the second half of the year.

US Crude Oil Data Update

Continued strength in end-user demand has kept refineries running at high utilization, drawing down product inventories, while commercial crude inventories have risen amid OPEC+ output increases and greater crude supply.

According to the EIA's Weekly Petroleum Status Reports released on 6/19, 6/26, and 7/3, US commercial crude inventories fell from 412.13 million barrels to 408.36 million barrels before rising back to 411.36 million barrels, showing an initial decline followed by a rebuild. The Strategic Petroleum Reserve (SPR) continued to decline from 331.19 million barrels to 319.49 million barrels, falling for three consecutive weeks. Gasoline inventories fell from 216.30 million barrels to 212.06 million barrels, while distillate inventories rose from 106.12 million barrels to 108.60 million barrels before falling back to 103.62 million barrels, showing a build-then-draw pattern that reflects gradually strengthening end-user demand. In addition, the Baker Hughes rig count rose from 440 to 445 and then held steady, indicating a slight uptick in drilling activity, though not yet a clear expansion. Refinery utilization rates ranged between 95.8% and 96.6%, remaining at high levels.

Overall, over the past three weeks the US crude market has shown commercial crude inventories falling then rising, the SPR continuing to decline, gasoline inventories consistently drawing down, and distillate inventories building before drawing down. Although refineries have maintained utilization near 96%, continuing to consume large volumes of crude, the latest week's commercial crude inventories still rose by 3.00 million barrels, driven by continued output increases from some OPEC+ members and the earlier recovery in strait shipping and crude supply. On the other hand, with oil prices rising, strong summer driving-season fuel demand along with a pickup in freight and industrial activity caused gasoline inventories to fall by 1.90 million barrels and distillate inventories to fall by 4.98 million barrels, reflecting continued improvement in refined product demand. Overall, US short-term crude supply remains relatively ample, but end-user demand has begun drawing down product inventories. Going forward, it will be important to continue monitoring the pace of OPEC+ output increases, the recovery of strait shipping, and whether refinery utilization remains high, in order to track trends in crude and product inventories.

Key News and Current Events

Renewed US-Iran Conflict: Ongoing "Gray-Zone" Confrontation Over Strait Access

In the preceding weeks, the US and Iran conducted multiple rounds of indirect negotiations brokered by Qatar, Pakistan, and other countries, and signed a temporary ceasefire memorandum of understanding (MoU) in June. Both sides agreed to suspend large-scale military conflict and pursue further peace talks over a 60-day period, while keeping the Strait of Hormuz open to commercial vessels. However, since the two sides never reached consensus on core issues such as jurisdiction over the strait, Iran's nuclear program, US sanctions, and oil exports, the ceasefire gradually lost its binding force. Between 7/6 and 7/13, US-Iran tensions escalated again, with both sides engaging in a new round of "gray-zone" confrontation centered on the Strait of Hormuz. Iran's Revolutionary Guard intensified patrols around the strait and conducted inspections and military deterrence against merchant and tanker vessels, with some ships damaged by missile and drone attacks. The US carried out a new round of airstrikes against Iranian military facilities, Revolutionary Guard bases, and fast attack craft, while also reinstating some oil sanctions and deploying additional air and naval forces to escort commercial vessels, demanding that Iran ensure freedom of navigation through the Strait of Hormuz. On July 10, US President Trump announced that while negotiations would continue, the ceasefire agreement reached in June had formally collapsed; Iran denied violating the agreement and reiterated it would not relinquish control over the Strait of Hormuz. Amid the escalation, some tankers chose to delay voyages, disable their AIS transponders, or switch to ship-to-ship transfers, causing the number of tankers transiting the Strait of Hormuz to fall to a nearly two-month low. Although the strait has not been formally blockaded, both sides continue to compete for control through limited military action, shipping deterrence, and diplomatic pressure — signs that the conflict has shifted from direct military confrontation toward a gray-zone competition centered on shipping safety and energy supply.

Currently, the US and Iran remain locked in "gray-zone" confrontation through limited military strikes, maritime inspections, shipping deterrence, and diplomatic pressure, which has not yet escalated into a full blockade of the Strait of Hormuz but has already reduced shipping efficiency and pushed up the market risk premium. In the near term, global crude supply has not yet seen a significant disruption, but continued interference with strait shipping would raise crude transport costs and supply uncertainty, providing support for international oil prices. Ongoing US-Iran interactions and the recovery of Strait of Hormuz shipping will remain important factors to watch.

Conclusion

Summary of the Three Major Agencies' Monthly Reports

In their July 2026 monthly reports, the EIA, IEA, and OPEC all agree that the impact of the Middle East conflict is gradually fading and that market focus has shifted from supply disruption to supply recovery, though their views on the supply-demand balance still differ. The EIA expects that once the Strait of Hormuz returns to normal navigation, Middle East crude supply will keep rising, causing global inventories to turn upward in the second half of 2026 and the market to return to oversupply in 2027 — leading to a sharp downward revision in its oil price forecast and an expectation that gasoline prices will fall alongside oil prices. The IEA believes that while global demand is recovering from its low point, it will still contract for the full year, with supply recovering faster than demand, producing a "two-track" market of loose crude supply and tight product markets, with refining margins staying high — though renewed escalation of the Middle East conflict could still disrupt the normalization process. OPEC remains relatively optimistic, believing global oil market fundamentals stay sound, with falling inventories, summer demand, and refinery utilization supporting the spot market. Although prices have fallen as the risk premium fades and speculative capital exits, the backwardation still reflects tight near-term supply-demand conditions, and OPEC has kept its global economic and oil demand growth forecasts unchanged. Overall, all three agencies agree that as supply recovers and crude transport normalizes, the market will once again be driven by supply-demand fundamentals. Future price direction will depend on the pace of supply recovery, changes in global demand, and inventory adjustments, with the Middle East situation remaining a key variable for market volatility.

Short-Term Crude Market Summary

Over the past three weeks, the international crude market has shown a pattern of both rising supply and improving demand. US commercial crude inventories fell and then rose, reflecting new supply gradually replenishing the market even as refineries maintained about 96% utilization; the Baker Hughes rig count rose from 440 to 445 and then held steady, indicating a slight increase in US crude supply, though not yet a clear expansion. Meanwhile, driven by the summer driving season and a pickup in freight and industrial activity, gasoline and distillate inventories continued to decline, showing that end-user demand remains resilient and continues to support the product market. On the geopolitical front, while the US and Iran had earlier engaged in ceasefire talks, they have recently resumed gray-zone confrontation around the Strait of Hormuz, with both sides pressuring each other through maritime patrols, vessel inspections, and limited military action. Although the strait has not been formally blockaded, shipping risk and crude transport costs have risen, and the market retains a degree of geopolitical risk premium. Overall, the short-term oil market shows a structure of relatively ample crude supply alongside continued improvement in product demand. While increased supply has lifted commercial crude inventories, ongoing end-user demand continues to draw down product inventories, keeping prices supported. Going forward, it will be important to monitor the US-Iran situation, the recovery of Strait of Hormuz shipping, and changes in US crude inventories and refinery utilization to assess the oil market's supply-demand balance and price direction.