Market Overview
On Wednesday, oil prices slipped, with Brent crude futures for September delivery dropping 2.4% to $71.19 a barrel and U.S. West Texas Intermediate (WTI) futures for August delivery falling 2% to $68.11 a barrel. The decline brought prices back to levels seen before the outbreak of the Middle‑East conflict, reflecting market reaction to reported progress in indirect technical talks between the United States and Iran mediated by Qatar.
Diplomatic Developments
The United States and Iran signed a memorandum of understanding (MoU) in France on 17 June, which reopened the strategic Strait of Hormuz. Subsequent indirect technical discussions were held in Doha on Monday, Tuesday and Wednesday, with Qatar’s foreign ministry spokesperson Majed al‑Ansari stating on social media that Qatari and Pakistani mediators achieved “positive progress” on MoU‑related issues. U.S. Vice President JD Vance told reporters that the talks were focusing on details such as the improvement of commercial traffic through the strait. Vance added that he could not guarantee the United States would refrain from resuming full combat operations after the 60‑day negotiation window, but emphasized that the President would not redeploy troops without a clearly defined purpose. Former President Donald Trump also remarked that “denuclearisation of Iran” was “moving along well,” without providing further specifics.
Shipping Activity
Kpler data indicated that 34 verified vessels crossed the Strait of Hormuz on Monday, suggesting that traffic through the narrow chokepoint remained steady despite earlier tensions.
Analyst Commentary
Analysts at ANZ noted that hopes for a lasting peace agreement were supporting crude prices, but warned that uncertainty over future governance of the strait continued to cloud the market outlook. They highlighted Iran’s reiterated intention to oversee maritime traffic and identified shipping security as a key risk factor for energy markets.
U.S. Crude Inventories
The U.S. Energy Information Administration (EIA) reported that total crude oil inventories, including the Strategic Petroleum Reserve (SPR), fell by 9.3 million barrels in the week ending 26 June, reaching 734 million barrels—the lowest level since May 1984. Excluding the SPR, inventories declined by 3.8 million barrels, slightly below the expected draw of 4.5 million barrels, leaving 408.4 million barrels on hand, the lowest since August 2018. SPR inventories themselves dropped 5.5 million barrels to 325.7 million barrels, the lowest figure since May 1983. At the Cushing, Oklahoma hub, storage levels rose for the first time in nine weeks, increasing by 700,000 barrels to a total of 19.7 million barrels.
Market Implications
The United States has been rapidly drawing down its ample oil reserves to keep domestic prices in check and to provide an alternative supply source for nations affected by the temporary closure of the Strait of Hormuz.