Oil Heads For Biggest Quarterly Loss Since 2020

Global oil prices were on course for their steepest quarterly decline since the height of the COVID-19 pandemic in 2020, as investors weighed uncertainty surrounding potential U.S.-Iran talks and the fragile ceasefire in the Middle East.

Brent crude edged slightly higher during Tuesday’s trading but remained on track for a third consecutive monthly decline, while U.S. West Texas Intermediate (WTI) was also set for a second straight monthly loss. Both benchmark prices have fallen sharply this month and are trading close to levels seen before the recent conflict between Israel and Iran.

Market analysts say improving shipping activity through the Gulf has eased some supply concerns, reducing the geopolitical risk premium that had pushed prices higher earlier in the conflict. More oil tankers have resumed operations, temporarily increasing available supply.

Attention remains focused on diplomatic efforts between the United States and Iran. Negotiators were expected to travel to Doha this week, but Iran has since stated that no meetings with U.S. officials are currently scheduled. The uncertainty comes after recent exchanges of missile fire tested the fragile ceasefire that has helped stabilise global energy markets.

Iran has also announced plans to begin discussions with Oman on redefining shipping routes through the Strait of Hormuz, one of the world’s most critical oil transit corridors. Iranian officials have warned they could obstruct vessels operating outside designated routes, adding another layer of uncertainty for global energy markets.

Investment bank Morgan Stanley has lowered its outlook for Brent crude prices in 2027, citing expectations of rising global oil inventories and an oversupplied market. The bank now forecasts Brent to average $75 per barrel during the first half of 2027 before easing to $70 per barrel in the second half, while projecting a global oil surplus of 4.8 million barrels per day.

Meanwhile, Iraq’s State Oil Marketing Organization (SOMO) has reportedly offered significant discounts on Basrah crude exports for July in an effort to encourage long-term buyers to lift additional cargoes from its Gulf terminal.

With geopolitical uncertainty easing slightly and expectations of stronger future supply, oil markets remain under pressure despite ongoing tensions in the Middle East.