World oil prices dropped to lowest in 4 months

Closing the trading session on July 1, Brent crude oil price decreased nearly 2% to 71.5 USD per barrel. US crude oil WTI fell 1.3% to 68.5 USD. These are all the lowest levels in 4 months. In this morning’s session, the price continued to decrease by nearly 1 USD.

The market went down when investors were optimistic about peace negotiations between the US and Iran, easing supply concerns. US President Donald Trump said the two sides’ talks in Qatar were “very good”.

“The negotiations in Qatar are considered positive, causing fuel prices to decrease further, and may continue to decline,” said Ole Hansen – analyst at Saxo Bank.

The US-Iran discussions are based on the memorandum of understanding and progress achieved at the conference in Switzerland in June. This memorandum includes a ceasefire agreement on all fronts, reopening the Strait of Hormuz and setting a 60-day period for the two sides to negotiate on the nuclear program, as well as work towards a final long-term agreement.

“Investors increasingly expect the amount of crude oil passing through the Strait of Hormuz to increase. The market signals that when this period is over, all barriers will be removed and the world can produce more oil than ever before,” said Phil Flynn – senior analyst at Price Futures Group.

The number of oil tankers passing through the Strait of Hormuz is recovering. US Vice President JD Vance said the flow of oil through this waterway had returned to pre-war levels, but did not give specific figures.

In the second quarter, Brent oil prices fell by about 45 USD a barrel – the strongest since the global financial crisis in 2008. Meanwhile, US crude oil fell by about 31 USD, the most since the Covid-19 epidemic caused global oil demand to plummet.

In the US, crude oil inventories last week decreased by 3.8 million barrels, to 408.4 million – the lowest since September 2018. The reason is that demand from domestic oil refineries increased before the July 4th National Day holiday, according to the US Energy Information Administration (EIA).

According to sources of Reuters, The Organization of the Petroleum Exporting Countries and its Allies (OPEC+) will likely continue to raise its August production target when it meets this Sunday.