Oil Prices Extend Losses As U.S.-Iran Talks Ease Supply Concerns

Oil prices fell for a third consecutive session on Thursday, dropping nearly 2% after talks between the United States and Iran in Qatar eased fears of supply disruptions through the strategically important Strait of Hormuz.

Brent crude futures fell $1.24, or 1.73%, to $70.33 per barrel by 1157 GMT, while U.S. West Texas Intermediate (WTI) crude declined $1.38, or 2.01%, to $67.20 per barrel. Both benchmarks slipped to their lowest levels since late February.

The decline followed the conclusion of U.S.-Iran negotiations in Doha, where discussions centred on maintaining stability in the Strait of Hormuz after the memorandum that ended last month’s conflict.

According to Qatar’s Foreign Ministry, the talks made “positive progress” on issues related to the June agreement, although officials acknowledged that no breakthrough had been reached toward a lasting peace settlement. The ministry also confirmed that another round of negotiations is expected after the July 9 funeral ceremonies for Iran’s late Supreme Leader, Ayatollah Ali Khamenei.

The easing geopolitical tensions have reassured traders that oil exports from the Middle East will continue without major disruptions. Shipping data showed that at least five supertankers carrying around 10 million barrels of Saudi crude have successfully passed through the Strait of Hormuz after loading at Ras Tanura. Saudi Aramco has also shifted to spot pricing to accelerate crude sales to Asian buyers.

Market analysts say improving supply conditions, combined with weak demand from China, continue to weigh on prices.

Bjarne Schieldrop, Chief Commodities Analyst at SEB, noted that oil continues to flow freely through the Strait of Hormuz while additional supplies are being released from strategic reserves. He added that China’s crude demand has yet to recover strongly, creating downward pressure on prices, although he believes the market could rebound after the current sell-off stabilises.

Despite Thursday’s decline, U.S. government data highlighted signs of strong domestic fuel demand. The Energy Information Administration reported that U.S. crude inventories fell to their lowest level since 2018 last week as refinery activity increased. Gasoline stockpiles also declined, pointing to stronger seasonal consumption.

Several financial institutions have adjusted their oil price outlooks in response to improving supply conditions.

UBS lowered its Brent crude forecast for the third quarter by $25 per barrel to $80, while maintaining an $80 forecast for the fourth quarter of 2026 after trimming its previous estimate by $10. The bank also reduced its 2027 Brent forecast by $10 to $75 per barrel, citing increased oil shipments through the Strait of Hormuz.

HSBC, however, expects the market to tighten later this year. The bank said additional Middle East production is likely to be absorbed through gradual inventory rebuilding, while the planned end of the International Energy Agency’s strategic oil stock releases in July could provide support for prices. Analysts believe Brent crude could recover toward $80 per barrel or higher once the current oversupply eases.

In another major development for the global energy sector, Nigeria became the first member of the Organization of the Petroleum Exporting Countries (OPEC) to join the International Energy Agency (IEA) as an associate member, strengthening cooperation between the world’s leading energy watchdog and Africa’s largest oil producer.

Meanwhile, geopolitical tensions remained elevated in Eastern Europe. Ukraine’s military said its forces carried out a strike on the Lukoil-Nizhegorodnefteorgsintez oil refinery in Russia’s Nizhny Novgorod region, targeting another piece of Russia’s energy infrastructure despite the recent decline in tensions in the Middle East.