Brent crude falls toward $70 as Hormuz traffic rebounds

Brent crude slid below $71 on Thursday after its biggest monthly drop since 2020, as Hormuz tanker traffic rebounded past 10 million barrels a day.investing+1
Morgan Stanley and Goldman Sachs both slashed Brent forecasts, citing fast Gulf supply recovery, strong U.S. output, and weak Chinese demand.finance.yahoo+1
OPEC+ is expected to approve a fifth consecutive monthly output hike for August when it meets Sunday, according to Reuters.reuters

Brent crude dropped below $71 a barrel on Thursday, sliding back toward levels last seen before the U.S.-Iran conflict disrupted global oil markets, as recovering tanker traffic through the Strait of Hormuz and the prospect of further OPEC+ supply increases weighed on prices.

The benchmark was trading in a range between $70.13 and $71.30 on Thursday, extending losses after posting its largest monthly decline since 2020. The decline comes as oil markets digest a confluence of bearish signals: rebounding Gulf exports, advancing peace negotiations, and looming production increases from major producers.investing+1

Hormuz Flows Rebound

Oil tanker traffic through the Strait of Hormuz has surged to more than 10 million barrels a day in recent weeks, according to Bloomberg data cited by Israel Hayom. Before the war, roughly 20 million barrels of oil and fuel passed through the strait daily, accounting for about 20 percent of global supply. With an additional 5 million barrels now moving along alternative routes, analysts say the market is approaching pre-war activity levels.israelhayom

The recovery followed the signing of a U.S.-Iran memorandum of understanding on June 17, which extended the ceasefire by 60 days and allowed the gradual reopening of the waterway. On Wednesday, Iran and the United States concluded a round of indirect talks in Doha focused on maritime traffic through the strait and unfreezing Iranian assets, though Reuters reported no breakthrough toward a lasting peace was achieved. Qatar cited "positive progress" on issues related to the memorandum.aljazeera+2

Banks Cut Forecasts

Wall Street has responded swiftly to the shifting supply picture. Goldman Sachs cut its fourth-quarter 2026 Brent forecast to $80 from $90 and lowered its 2027 average to $75 from $80, now expecting Persian Gulf exports to normalize by end-July. Morgan Stanley followed with a deeper revision, slashing its third-quarter Brent forecast by $15 to $75 a barrel, warning that high U.S. exports and weak Chinese demand compound the risk of a surplus.finance.yahoo+3

OPEC+ Eyes Fifth Consecutive Hike

OPEC+ is expected to approve another increase of roughly 188,000 barrels per day for August when it meets on Sunday, according to three sources cited by Reuters. The hike would mark the fifth consecutive monthly increase since April, when the group began unwinding production cuts even as the Hormuz disruption limited some members' ability to pump. At the current pace, the remaining cuts could be fully unwound by the end of September.reuters+2

Sources (30)