“A wave of oil is about to enter the market,” said Natasha Kanaeva, head of commodity research at JPMorgan Chase & Co. (Elke Scolliers/Getty Images via Bloomberg)
key takeaways:
- Oil fell below pre-war levels after Saudi Arabia resumed crude exports from its Ras Tanura terminal at normal rates.
- UAE exports surged to 3.9 million barrels per day and Strait of Hormuz flows to more than 10 million, officials and data showed, adding to the surge in supply.
- Qatar said the next US-Iran talks would be scheduled after Ali Khamenei’s funeral, as the shipping-control dispute continues.
Oil deepened its slide below pre-war levels as Saudi Arabia raised crude exports toward normal rates, boosting flows from the Persian Gulf and raising the prospect of a supply surplus.
Brent futures in London fell to near $70 a barrel, their lowest level since the week before the Iran war began on February 28. Saudi Arabia managed to load about 90% of previous levels of crude after resuming shipments from its giant Ras Tanura terminal late last week, according to vessel-tracking data compiled by Bloomberg. US benchmark West Texas Intermediate fell to near $67 a barrel.
The kingdom’s comeback matches that of its neighbor the United Arab Emirates, which last month restored its oil exports to pre-conflict levels of more than 3.9 million barrels per day. A US official estimates that oil supplies through the Strait of Hormuz choke point have now reached more than 10 million barrels per day.
The result has been a massive amount of oil flooding the market at a time when many wartime supply measures are still in place – including the release of emergency reserves and reduced imports by China. Brent futures are trading in a bearish contango price structure indicating short-term oversupply with discounts on nearest contracts. The premium for physical crude oil has also declined in recent times.
“A wave of oil is about to enter the market,” said Natasha Kanaeva, head of commodity research at JPMorgan Chase & Co. “And herein lies the paradox. The increase in oil supply is going to hit a market that doesn’t need it, at least not right now.”
Saudi Arabia has taken the unusual step of selling millions of barrels on an ad-hoc basis to customers in Asia as it resumed shipping its crude from inside the Persian Gulf.
Brent futures continue to slide after their biggest quarterly decline since the pandemic in 2020, with losses of more than 40% from their peak at the height of the war. Flows through the Strait of Hormuz – which links Persian Gulf producers to global buyers – continued despite tensions over the weekend, easing fears of a spike in oil-driven inflation.
“The market is extremely loaded with crude at the moment,” said Arne Lohman Rasmussen, chief analyst at A/S Global Risk Management. “A substantial amount of oil is pressurizing the front.”
Qatar said the next set of indirect talks between the US and Iran would be scheduled as soon as possible after the funeral procession of Iran’s former supreme leader Ali Khamenei, who was killed in an airstrike at the beginning of the conflict. According to Iranian state-run media, celebrations are expected to begin on July 4 and continue for several days.
Ahead of the Qatar talks, Iran reiterated its determination to control shipping through Hormuz, one of several sticking points that include the Islamic republic’s nuclear program and the fighting in Lebanon. US President Donald Trump reiterated in his remarks to reporters in Virginia on July 1 that Iran cannot have nuclear weapons.
JPMorgan said how quickly the immediate supply glut ends will depend on a surge in buying from China and the speed with which other governments replenish depleted inventories. Total US stockpiles fell to the lowest level since March 2025, with inventories excluding strategic reserves down by about 1.2 billion barrels, after 12 consecutive weeks of decline.
