Oil prices are trading down today “as the market removes part of the Middle East supply-risk premium”, Waleed Said, Technical analyst at GivTrade, outlined in a market analysis sent to Rigzone on Friday.
“Oil is moving lower because tanker flows through the Strait of Hormuz have resumed after the ceasefire framework, reducing immediate fears of a major supply disruption,” Said noted in the analysis.
“However, the decline is not a clean demand-collapse signal. Prices are still reacting to headline risk because an incident involving a cargo ship near Oman reminded traders that regional shipping security remains fragile, even as traffic improves,” he warned.
In the analysis, Said highlighted that U.S. President Donald Trump’s comments are influencing oil through three channels; “demand expectations, supply chain confidence, and geopolitical risk”.
“His remarks on agricultural innovation, China’s U.S. $17 billion agricultural purchase commitment, new markets for U.S. wheat, soybeans and corn, manufacturing strength, farmer relief, nuclear energy, and nearly U.S. $19 trillion in investment support the idea of stronger domestic activity, logistics, trucking, fertilizer use, food transport, factory construction, and diesel demand,” Said pointed out.
“Iran related comments and pressure on Europe keep a geopolitical premium in the background,” he added.
“In simple terms, the pro-growth comments can support oil demand, while easing shipping conditions pressure prices lower; geopolitical uncertainty prevents the market from treating the oil selloff as risk-free,” Said outlined.
Said went on to highlight that economic data from Thursday adds a mixed demand signal.
“May PCE inflation rose 0.4 percent month over month, below the 0.5 percent estimate, but core PCE stayed at 0.3 percent; year over year headline PCE rose to 4.1 percent from 3.8 percent, while core PCE increased to 3.4 percent from 3.3 percent,” he said.
“Personal income rose 0.7 percent, personal spending rose 0.7 percent, initial jobless claims dropped to 215,000 versus the 225,000 estimate and 227,000 prior, durable goods orders fell 4.5 percent, ex-transportation orders rose 1.3 percent, and core capital goods orders increased 1.6 percent,” he added.
“For oil, strong income, spending, and low layoffs support travel, freight, services activity, and fuel demand, but sticky inflation can keep rates higher for longer, strengthen the dollar, and weaken future consumption appetite,” he continued.
Said projected that today’s USD Revised University of Michigan (UoM) Consumer Sentiment and Revised UoM Inflation Expectations will be important for the next oil move.
“A stronger sentiment reading can support crude because confident consumers are more likely to spend, travel, drive, and support broader fuel demand, but if inflation expectations rise at the same time, the dollar and Treasury yields may strengthen and limit oil upside,” he said.
“A weaker sentiment figure could pressure crude through softer demand expectations, while lower inflation expectations may cushion the downside by reviving hopes for easier policy later,” he added.
Said went on to note that OPEC “has lowered its 2026 demand growth forecast to 970,000 barrels per day, while the IEA expects global oil demand to decline by 1.1 million barrels per day year over year in 2026 and global supply to fall by 3.9 million barrels per day to 102.4 million barrels per day”.
“Crude remains pulled between OPEC’s demand support, IEA caution, geopolitical volatility, and shifting U.S. macro data,” he pointed out.
Lowest Level in 3 Months
In a market update sent to Rigzone on Thursday by the Rystad Energy team, Rystad highlighted that Brent crude was trading at around $73 per barrel, “near its lowest level in three months”.
Rystad outlined in that update that the oil market was pricing in a faster than expected recovery in Middle East supply. The company revealed that it estimates that shut-in production across the Gulf had fallen to 9.6 million barrels per day in mid-June, “down from 11.7 million barrels per day just three weeks ago”.
“The 17 June preliminary U.S.-Iran agreement and Washington’s subsequent decision to lift Iranian oil sanctions for 60 days have driven the acceleration,” Rystad said in the update.
The company revealed that it had revised its forecast for a full regional supply recovery forward by a full quarter, to the end of 2026.
“Two million barrels a day came back online in three weeks, and the recovery is spread across the region,” Rystad Energy MENA Research Director Aditya Saraswat said in the update.
“Iran is moving fastest because its shut-in was shorter and upstream damage was limited. Kuwait has already lifted all force majeure notices and is offering July cargoes by tender. Saudi Arabia is on track for a record 4.5 million barrels per day through Yanbu this month,” Saraswat added, noting that “the supply picture is clearly improving”.
The Rystad Research Director went on to warn in the update that the variable that will determine how quickly prices settle at a new level is Hormuz transit volumes.
“Storage tanks across the Gulf are around 50 percent to 60 percent full, so if tanker traffic through the strait does not pick up in the near term, producers will need to throttle back output, and the full recovery moves into next year,” Saraswat said.
“The diplomatic agreement is a necessary first step and physical tanker flows through Hormuz are what we are watching now,” Saraswat added.
In a report sent to Rigzone on Wednesday by Natasha Kaneva, J.P. Morgan’s head of global commodities strategy, J.P. Morgan analysts, including Kaneva, outlined that the “magnitude and duration of the oil shock evolved broadly as expected”. They added, however, that the market “has rebalanced through a meaningfully different mix of demand losses and inventory withdrawals” than they initially assumed.
“OECD commercial inventories draws – the most price-sensitive variable in our framework – have come in below expectations, while demand losses have been larger than expected, implying materially less upward pressure on oil prices than in our original forecast,” the J.P. Morgan analysts noted in the report.
“We are therefore lowering our Brent outlook for 2H26 and 2027,” they revealed.
The analysts highlighted in the report that they now forecast Brent will average $86 per barrel in the third quarter of this year and $80 per barrel in the fourth quarter, exiting 2026 at $78 per barrel, and averaging $64 per barrel next year.
“Even so, our revised path remains materially above the forward curve in 2026 and below the curve in 2027,” the J.P. Morgan analysts said.
Down 20 Percent Over 30 Days
In a report sent to Rigzone by the Macquarie team on Tuesday, Macquarie strategists, highlighted that oil markets fell around 20 percent over the past 30 days “due to deal optimism that reduced risk premiums alongside manageable crude and product draws in May and June”.
“Now, post the signing of the MoU, the long awaited re-opening of the Strait of Hormuz has shifted the focus to normalization scenarios,” the strategists said.
They added that, in their view, “complexity bias has set the narrative that normalization of the oil market could take a great deal of time; modal expectation of one year and as much as two years”.
“The bias drives the idea that problems with numerous potential rate limiting steps increases the odds of delays and negative surprises. We disagree,” they noted.
The strategists revealed in the report that they had lowered their 2026 oil price outlook, “with WTI averaging ~$77 per barrel, down from ~ $89 per barrel as the recently signed Memorandum of Understanding has shifted our assumptions for Middle East crude availability”.
“Additionally, we decreased our FY’27 oil price outlook, with WTI now averaging ~$64 per barrel, dropping from ~$74 per barrel,” they pointed out.
“Going forward”, the strategists noted in the report that they continue to believe that the best trading and risk management posture is “to be nimble”.
“Logistical challenges will rise and be resolved. Restocking demand will cause rallies which will be capped by the cessation of restocking due to higher prices. Refining runs will over and undershoot optimal levels due to fast moving margins and the uneven return of damaged kits,” they projected.
“One fundamental factor we think that will be steadier and more predictable is the return of production and supply. We believe both will be larger and faster than consensus expectations,” they said.
In a report sent to Rigzone on Wednesday, Standard Chartered Bank Energy Research Head Emily Ashford outlined that Strait of Hormuz transits had risen but warned that normalization will take months.
“There has been a sharp rise in confirmed crossings of the Strait of Hormuz, with 71 total transits recorded from 19-21 June,” Ashford highlighted in the report.
“However, these transits remain opportunistic and cautious and do not yet represent sustained traffic,” Ashford cautioned.
“The strait remains vulnerable to short-term closure, particularly as U.S.-Iran rhetoric has risen during the direct talks,” Ashford added.
“While formal announcements around the timeline for normal operations to resume have been limited to date, indications from some producers suggest that they aim to resume exports within months of the strait opening,” Ashford went on to note.
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