Oil prices were heading for their largest quarterly loss since the COVID-19 pandemic began in early 2020.
Investors remained focused on possible U.S.-Iran talks in Doha as uncertainty surrounded the fragile interim ceasefire in the four-month conflict.
Brent Crude Heads for Third Monthly Decline
Brent crude futures for August, which expire on Tuesday, rose 0.21%, or 15 cents, to $73.30 per barrel at 13:02 GMT.
Despite the daily increase, the contract was on track for a third consecutive monthly decline. Brent was down approximately 20% in June.
The more actively traded September Brent contract gained 0.61%, or 45 cents, to $74.36 per barrel.
WTI Crude Remains Under Pressure
U.S. West Texas Intermediate crude futures for August rose 0.51%, or 36 cents, to $71.11 per barrel.
However, WTI remained on course for a second straight monthly decline. The contract had fallen approximately 19% during June.
Oil Prices Record Heavy Quarterly Losses
Brent crude was down around 38% for the quarter, while WTI had lost approximately 30%.
Both oil benchmarks were trading close to the levels seen shortly before the U.S.-Israel conflict with Iran began.
The sharp quarterly decline reflects easing fears of a prolonged disruption to oil exports through the Strait of Hormuz.
Gulf Shipping Recovery Adds Temporary Supply
UBS analyst Giovanni Staunovo said the market had not completely removed the geopolitical risk premium from oil prices.
However, more vessels have been able to leave the Gulf. As a result, previously stranded supplies have returned to the market and created a temporary increase in availability.
Improving tanker movements have reduced concerns about an immediate shortage of crude oil.
Morgan Stanley Predicts Large Oil Surplus
Morgan Stanley expects the global oil market to face a substantial supply surplus in the coming years.
The bank now estimates an implied surplus of approximately 4.8 million barrels per day in 2027.
Expectations of excess supply could place further pressure on oil prices unless global demand strengthens or producers reduce output.
No High-Level U.S.-Iran Meeting Scheduled
Senior U.S. officials who arrived in Doha are not expected to hold a high-level meeting with Iranian representatives, according to a Qatari official.
The announcement raised doubts about whether diplomatic efforts can produce a lasting end to the conflict and fully restore traffic through the Strait of Hormuz.
Instead, technical discussions are expected to take place during the week.
Technical Talks Could Lead to Senior Negotiations
Qatar Foreign Ministry spokesperson Majed Al Ansari said the technical talks would cover issues such as regional security.
The discussions could later be elevated to a more senior diplomatic level if progress is made.
However, uncertainty over direct U.S.-Iran negotiations highlights the fragile nature of the agreement reached on June 17 to pause the fighting.
Strait of Hormuz Remains Crucial for Oil Markets
The conflict has disrupted global oil flows through the Strait of Hormuz, one of the world’s most important energy routes.
The instability has also created a political challenge for U.S. President Donald Trump ahead of the November congressional elections.
A lasting agreement that protects tanker traffic could reduce the risk premium in oil prices. Renewed fighting, however, could quickly revive supply concerns.
Analysts Cut Their 2026 Oil Price Forecasts
Analysts lowered their 2026 oil price forecasts for the first time since the conflict with Iran began, according to a Reuters survey.
The revisions followed five consecutive months of higher projections.
The reopening of the Strait of Hormuz has eased concerns that oil supplies could face a prolonged disruption.
Iraq Offers Discounts on Basrah Crude
Iraq’s state oil marketer, SOMO, has reportedly offered significant discounts on its official selling prices.
The move is designed to encourage long-term buyers to collect Basrah crude from Iraq’s Gulf terminal in July.
The discounts may add further pressure to an already well-supplied oil market as traders assess the outlook for Middle East exports and global demand.
