Oil prices fluctuated within a narrow range, with flows continuing through the Strait of Hormuz and OPEC+ signaling increased supplies.
Brent crude traded below $72 a barrel, while West Texas Intermediate was near $69. Oil and gas shipments through a US-protected corridor in the Strait of Hormuz showed signs of recovery on Sunday, a day after several vessels made sudden turns and changes in course in the vital waterway.
Separately, OPEC+ members backed another modest increase in quotas for next month, with seven countries, led by Saudi Arabia and Russia, agreeing to add 188,000 barrels per day, further easing restrictions imposed several years ago. For now, these additional barrels remain theoretical, but the group's decision indicates a willingness to increase production as the economy continues to recover.
Hormuz flows and the return of supplies are putting pressure on oil.
Brent crude prices collapsed 30% in the second quarter, as Washington and Tehran agreed to a temporary peace deal, paving the way for a rapid, though not yet complete, resumption of traffic through the Strait of Hormuz.
Under these circumstances, Wall Street banks predicted that prices would have room to fall further during the second half of the year, with Citigroup Inc. indicating a possible return to the $60 range by year-end.
Analysts at RBC Capital Markets LLC, including Helima Croft, wrote in a note that OPEC countries affected by the war are in a rebuilding phase when it comes to production and exports. They added: However, we believe there is very limited appetite for a supply-driven price collapse.
Major producers in the Arabian Gulf were ramping up production at a rapid pace. Saudi exports had already jumped to near-pre-war levels, with the kingdom rerouting its tankers through the Strait of Hormuz. The United Arab Emirates, which had previously withdrawn from OPEC, also resumed flows.
Monitoring the prices of raw materials in the region
Traders will be watching this week for official selling prices from Saudi Arabia, the UAE, and other producers as they attempt to bring more product back to the market. For July, Riyadh has lowered the premium for its main crude to Asia to $9.50 a barrel, down from $15.50 in June.
In a sign of increasing near-term market resilience, the Brent and Dubai crude benchmark spreads have reversed into a bearish contango pattern, with short-term contracts trading at a discount to longer-term contracts. Many grades in the physical market are also cheaper than the underlying benchmarks.
Over the weekend, Iran began a mass funeral for Supreme Leader Ali Khamenei in ceremonies in the capital, Tehran. Khamenei was killed in a US-Israeli attack on the first day of the US-Israeli war on Iran in February.
