Oil Continues to Decline with Increased Flows through Hormuz and Progress in Iran Talks

SadaNews - Oil declined for the third day in a row as flows through the Strait of Hormuz increased, with signs of progress in the indirect talks between the United States and Iran.

Brent crude for September delivery traded close to $71 a barrel, having dropped more than 3% in the previous two sessions, while West Texas Intermediate was near $68.

An American official stated that oil supplies through the vital waterway reached over 10 million barrels per day, highlighting Tehran's limited capacity to halt shipments, while President Donald Trump praised the progress in negotiations.

Qatar indicated that the next meeting will be set as soon as possible after the funeral ceremonies for former Iranian Supreme Leader Ali Khamenei, who was killed in an airstrike at the beginning of the conflict. The ceremonies are expected to start on July 4 and last for several days, according to state-run Iranian media.

Oil extended its losses after its worst quarter since 2020, with flows continuing through Hormuz, which connects Gulf producers to global buyers, despite tensions over the weekend that saw exchanges of strikes between Tehran and Washington.

While overall supplies remain limited, UAE exports have reached pre-war levels thanks to alternative routes, and major U.S. crude grades have fallen to trade at discounts as demand for American supplies fades.

Hormuz Flows Weigh on Oil Prices

Sol Kavonik, chief energy analyst at MST Marquee, noted the millions of barrels in strategic petroleum reserves that countries have turned to in order to compensate for lost Gulf supplies: "Prices continue to decline gradually, coinciding with the abundant flow of oil out of the Strait of Hormuz, the release of strategic petroleum reserves, and decreased demand, as tensions between Iran and the United States are contained, at least for now."

He added that "the Revolutionary Guard may be reluctant to relinquish its influence over the strait, as its ability to hold the global economy hostage is the only leverage it actually possesses."

Ahead of talks in Qatar, Iran reiterated its determination to control navigation through Hormuz, highlighting points of contention with Washington, including the nuclear program and fighting in Lebanon, complicating discussions during the 60-day ceasefire window. Trump reiterated that Iran cannot possess a nuclear weapon in statements to reporters on Wednesday in Virginia.

Total U.S. inventories fell to their lowest levels since March 2025, with stocks, excluding strategic reserves, around 1.2 billion barrels after 12 consecutive weeks of declines.