Oil prices extended their losing streak into a third consecutive session on Thursday, sliding further as traders grew more confident that supply disruptions tied to months of turmoil around the Strait of Hormuz were beginning to unwind.
Brent crude futures dropped 66 cents, or 0.92%, to $70.91 a barrel by 07:58 GMT, while U.S. West Texas Intermediate fell 59 cents, or 0.86%, to $67.99, the lowest level for both benchmarks since February 27, just before the war between Iran and a U.S.-Israeli coalition erupted and sent prices sharply higher earlier this year.
The retreat in prices followed a statement from Qatar’s Foreign Ministry describing “positive progress” in talks between Iran and the United States over implementation of the memorandum of understanding that halted the fighting in June.
A ministry spokesperson posted the update on X, though officials stopped short of suggesting the two sides were any closer to a durable peace agreement.
Doha, along with Pakistan, has served as the principal mediator between Washington and Tehran since the ceasefire, hosting rounds of indirect technical talks aimed at cementing the fragile truce.
The ministry said the next round of negotiations would not resume until after July 9, once funeral processions conclude for Iran’s late Supreme Leader Ayatollah Ali Khamenei, who was killed in the opening days of the conflict.
Much of the pressure on prices this week has come not from diplomacy alone but from tangible changes on the water. Analysts pointed to a steady stream of tankers that had been stranded in the Gulf for weeks finally making their way out through the strait, adding real barrels back into a market that had priced in far tighter supply.
“Recovering oil flows through the Strait continue to weigh on prices, driven by previously stranded tankers exiting the Gulf. This additional supply is a headwind for oil for now,” said Giovanni Staunovo, an analyst at UBS.
That reopening remains partial and contested. Iranian forces have continued to insist that vessels transit only through Iranian waters rather than the southern route via Omani waters that Washington has encouraged shippers to use, an assertion of control that underscores how unsettled the situation remains even as traffic picks up.
Two senior Iranian sources said Tehran remains determined to secure international recognition of its authority over the strait, including the right to levy fees on vessels entering or leaving the Gulf by force if necessary.
The demand reflects Iran’s broader push to convert its wartime leverage over the waterway, through which roughly a fifth of the world’s seaborne oil trade normally passes, into a lasting economic and strategic asset even as the guns have gone quiet.
The shifting outlook has prompted banks to revise their price forecasts. UBS lowered its Brent estimates across the board, citing the U.S.-Iran memorandum and the resulting pickup in shipping through the strait. The bank cut its third-quarter forecast by $25 a barrel to $80, trimmed its fourth-quarter 2026 estimate by $10 to $80, and reduced its 2027 outlook by $10 to $75.
Not every bank sees the drop persisting. HSBC analysts said they expect the market “to absorb returning Middle East barrels through gradual restocking, alongside the end of IEA strategic stock releases in July.”
The bank added that as the current “mini-glut” fades, “Brent could move back towards $80/b or higher,” a reminder that the current dip may prove more of a pause than a reversal in the broader post-war price trajectory.
Adding to the supply picture, OPEC+ producers are expected to approve a further increase in output targets from August when the group meets Sunday, according to sources familiar with the discussions.
It would mark the latest in a string of monthly hikes the group has approved since April as part of a gradual unwinding of earlier production cut increases that have so far mattered less in practice than on paper, given how much Gulf output has been constrained by the Hormuz disruptions.
Even as diplomacy inches forward, the conflict’s aftershocks continue. Ukraine’s General Staff said Thursday that Ukrainian forces struck the Lukoil-Nizhegorodnefteorgsintez oil refinery in Russia’s Nizhny Novgorod region, a reminder that, far from the Gulf, other fronts in the global energy war remain very much active, with implications of their own for refined product supplies and prices
Taken together, Thursday’s price action captures a market caught between cautious optimism over a slow, contested reopening of one of the world’s most critical chokepoints and lingering uncertainty over whether the underlying U.S.-Iran standoff and the wider regional war it grew out of is truly moving toward resolution or merely pausing for a funeral.
WHAT YOU SHOULD KNOW
Oil fell for a third straight day to its lowest since February 27 as tankers stranded for months finally began exiting the Strait of Hormuz, easing supply fears after Qatar reported “positive progress” in U.S.-Iran talks. But the relief may be temporary: Iran is still pushing to control the strait and tax its traffic, OPEC+ is set to add more output Sunday, and while UBS cut its price forecasts, HSBC expects Brent to climb back toward $80 once the current glut clears.
