Oil Prices Close Week Lower Amidst Uncertainties
Oil prices closed the week lower as progress in US-Iran negotiations, recovering shipping activity through the Strait of Hormuz, and expectations of another OPEC+ production increase eased concerns over disruptions to Middle East crude supplies.
International benchmark Brent crude traded at $71.54 per barrel, down 2.2% from last Friday’s close of $73.15. US benchmark West Texas Intermediate (WTI) fell 3.2% on a weekly basis to $68.50 per barrel from $70.75 a week earlier.
Crude prices remained under pressure throughout the week as investors grew increasingly optimistic that Washington and Tehran could reach a broader agreement following a series of diplomatic contacts mediated by Qatar and Pakistan.
Comments by US President Donald Trump suggesting negotiations were advancing and that the two sides had agreed on most key issues reinforced expectations of further easing in regional tensions.
Additional pressure came from improving shipping activity through the Strait of Hormuz, where tanker traffic has gradually returned to pre-conflict levels. The recovery in oil flows through the strategic waterway reduced fears of prolonged supply disruptions and prompted traders to unwind much of the geopolitical risk premium built into prices since the conflict began in late February.
Investor attention also turned to Sunday’s OPEC+ meeting, where the producer group is widely expected to approve another 188,000-barrel-per-day production increase for August. Expectations of additional supply returning to the market added to concerns over a looser global supply outlook.
Despite the decline, uncertainty over the durability of any future US-Iran agreement continued to provide some support, with both sides offering mixed signals on the pace and scope of negotiations.
Iranian officials also reiterated that the future status of the Strait of Hormuz would remain subject to Tehran’s decisions, highlighting that geopolitical risks have not disappeared entirely.
Meanwhile, supply risks linked to the Russia-Ukraine war remained in focus. Ukrainian attacks on Russian energy infrastructure and reports of disruptions at several Russian refineries continued to raise concerns over fuel availability, limiting downside in crude prices.
Support also came from stronger-than-expected US inventory data. Figures from the US Energy Information Administration (EIA) showed commercial crude inventories fell by 3.8 million barrels to 408.4 million barrels in the week ended June 26, exceeding market expectations for a decline of about 2.9 million barrels. Gasoline inventories also declined, pointing to resilient fuel demand in the world’s largest oil-consuming country.
The week’s losses extended the sharp correction that began in mid-June after Washington and Tehran announced a framework agreement to end hostilities and pursue a broader settlement through negotiations.
Since then, Brent has retreated below $73 per barrel after climbing above $126 in April, as improving prospects for diplomacy and the normalisation of shipping through the Strait of Hormuz have steadily eroded the conflict-driven risk premium.
Analysts said the next direction for oil prices will largely depend on progress in US-Iran negotiations, the pace of the recovery in Hormuz oil flows and OPEC+’s production decisions in the coming months.
