OPEC output surged in June as Hormuz flows resumed

OPEC crude oil production jumped by 2.34 million barrels a day in June to 18.75 million barrels a day, driven by Kuwait, Saudi Arabia, and Iran restoring exports through the Strait of Hormuz following a peace accord between the United States and Iran, according to a Bloomberg survey published Thursday.bloomberg+2

The increase marks a dramatic reversal from May, when OPEC output had fallen to 16.33 million barrels a day — its lowest level in at least 37 years — as the U.S. blockade of Iran and fighting in the Persian Gulf choked off production.bloomberg+1

The Deal That Reopened the Strait

The recovery was made possible by a memorandum of understanding signed on June 17, in which the U.S. and Iran agreed to a 60-day ceasefire extension and the immediate reopening of the Strait of Hormuz. Under the deal, Iran removed mines it had laid in the waterway while the U.S. began dismantling its naval blockade. The strait had been effectively closed since late February when the U.S. and Israel launched military strikes against Iran.nytimes+2

Industry analysts cautioned that a full recovery would take months. Reuters reported that Gulf oil fields could reach roughly 70% of pre-war production within three months and 90% within six months. ING strategists noted in early July that while tanker traffic had picked up, vessel movements through Hormuz still appeared limited.cnbc+1

Oil Prices Collapse as Risk Premium Evaporates

The easing of supply fears sent oil prices into freefall. Brent crude dropped roughly 21% in June — its largest monthly decline since March 2020 — while WTI fell more than 20%, its worst monthly performance since late 2021. By early July, Brent had fallen below $71 a barrel, returning to pre-war levels last seen before the conflict began on February 28.reuters+2

The slide accelerated after President Trump said U.S.-Iran talks in Qatar were "going well" and that "the denuclearization of Iran is moving along". Brent started June near $96 a barrel, meaning the benchmark lost roughly a quarter of its value in a single month as the supply risk premium that had briefly pushed WTI above $70 dissipated.cnbc+1

Despite the recovery, OPEC output remains far below its pre-war level of roughly 29 million barrels a day, and analysts say global inventories depleted during the conflict could take years to rebuild.bloomberg+1