Optimism on Hormuz flow recovery and impending OPEC+ supply hikes drag crude to four-month lows

Crude benchmarks sank to their lowest levels since March on Wednesday, driven by constructive diplomatic talks in Qatar, which US President Donald Trump indicated are advancing toward a lasting ceasefire and normalized transit through the Strait of Hormuz.

The international Brent contract dropped $1.38 (1.89%) to settle at $71.57 a barrel, finalizing a historic $45 contraction for the second quarter—its sharpest quarterly decline since the 2008 financial crisis.

US WTI shed 92 cents (1.32%) to close at $68.58, sealing a $31 Q2 drop that marks its steepest quarterly sell-off since the 2020 pandemic.

The diplomatic thaw is instantly materializing in physical maritime logistics. US Vice President JD Vance confirmed that tanker flows through the strategic chokepoint have already rebounded to pre-war baselines. This rapid clearing of structural bottlenecks has fundamentally altered the forward curve; analysts in a Reuters poll officially downgraded their 2026 global oil price forecasts for the first time since the conflict erupted.

Fundamental supply indicators are heavily compounding the bearish macroeconomic sentiment. The US Energy Information Administration (EIA) reported domestic crude inventories fell by 3.8 million barrels to 408.4 million—the lowest threshold since September 2018—driven by robust pre-holiday refinery runs. However, because this draw underperformed Wall Street expectations of a 4.5 million-barrel decline, it failed to provide localized price support.

Expanding this supply overhang globally, OPEC+ delegates indicated the coalition is highly likely to approve a scheduled production target hike for August during its upcoming Sunday session, ensuring a forward market flushed with incoming supply.

Written by: Aiman Haikal