Oil Stabilizes Amid Anticipation of Washington-Tehran Talks Results

SadaNews - Oil stabilized after its largest quarterly decline since the COVID-19 pandemic, with traders monitoring peace talks between the United States and Iran and the resumption of shipping through the Strait of Hormuz.

Brent crude traded above $73 per barrel, after falling by nearly a third over the past three months, while West Texas Intermediate crude hovered around $70.

A senior U.S. official stated that negotiators Jared Kushner and Steve Vitkoff held positive discussions in Qatar, and that technical talks with Iran are progressing.

The duo was in Doha for indirect talks aimed at easing tensions over the vital waterway that links Gulf producers to global markets.

Crude prices have declined in recent days as both warring parties continue discussions to reach a more sustainable agreement, although recent attacks around Hormuz have disrupted negotiations.

The movement of oil tankers now shows signs of recovery, having bounced back since the U.S. and Iran exchanged strikes over the weekend.

Samantha Dart, co-head of global commodities research at Goldman Sachs Group, noted regarding the conflict: "We expect this to end by the end of July." She added: "Once flows through the strait return, the expectation is that we will enter a supply surplus."

Expectations of an Oil Glut with Hormuz Flows Resuming

Goldman Sachs estimates the surplus at about 2 million barrels per day next year, even after accounting for the refilling of global strategic oil reserves following the Iran war.

Morgan Stanley also warned of a potential imminent glut with flows through the strait returning faster than expected and lowered its price forecasts for the second time in about two weeks.

Markets are now also facing a heavy influx of crude from other sources. Iran stated that it has exported over 40 million barrels of oil since the U.S. lifted its maritime blockade, while Russian shipments are rising to record levels, leading to a significant accumulation of barrels at sea.

Iran reiterated its determination to control maritime traffic through the strait, reminding that the main points of contention, including the country's nuclear program and the end of fighting in Lebanon, remain unresolved and could complicate discussions during the 60-day ceasefire window.

Traders will also look to U.S. crude inventory data set to be released later on Wednesday. This comes after data from the Energy Information Administration published last week showed that nationwide inventories hit their lowest level since 1984.