By: Bruno Santos, Market Intelligence Analyst
Yesterday (06/29), the most active Brent contract closed up by 1.8%, quoted at USD 73.9/bbl. WTI followed the bullish bias, trading around USD 70.8/bbl (+2.2%).
The escalation of tensions in the Strait of Hormuz over the weekend restricted the flow of tanker vessels through the region, compressing available supply and increasing the embedded risk premium in contracts. The movement reflected participants’ reaction to the risk of new interruptions in physical flows through the main crude export corridor in the Persian Gulf.
This morning (06/30), around 8:30 AM, the most active Brent contract traded at USD 73.9/bbl (+0.43%), while August WTI advanced to USD 71.02/bbl (+0.38%). Indications of a possible resumption of negotiations between the US and Iran in Doha are weighing on the risk premium, but uncertainty regarding whether the meeting will take place maintains a moderately bullish bias.
Tanker traffic through the Strait of Hormuz has advanced intermittently since the ceasefire agreement on June 17, with exported cargo volume still running around 50% of pre-conflict levels. The global fleet is repositioning in anticipation of full resumption, with empty vessels returning to the Persian Gulf, but the effective flow of loaded cargo remains constrained by operational and security risks.
Why this matters: The divergence between fleet repositioning and actual physical flows indicates the market is pricing in a recovery that has not yet materialized, which sustains pronounced volatility in freight rates and crude prices. In the short term, any reversal in US-Iran negotiations or a new incident in the strait may trigger sharp upward repricing. In the medium term, normalization depends on the definition of transit corridors.
What to expect? As long as the June 17 ceasefire agreement remains fragile and transit corridors have not been formalized, physical flows should continue below pre-conflict capacity, sustaining a residual risk premium in Brent. Expectations are for a gradual and volatile recovery throughout July, with balance normalization only in Q4 2026—in a scenario of agreement between Washington and Tehran for full resumption of flows through Hormuz.
Brent accumulates a decline of approximately 20% in June and closes the second quarter of 2026 with the largest quarterly drop since the Covid-19 pandemic. The movement combines the return of Iranian supply to the market after the interim agreement, selling pressure from Gulf producers—UAE, Qatar, Kuwait, and Iraq—and a bearish revision of expectations. Iraq, through SOMO, offered broad discounts relative to official selling prices to stimulate buyers to withdraw Basrah crude in July directly from the Gulf terminal.
Why this matters: Iraqi discounts signal difficulties in offloading even with Asian demand showing moderate recovery, pressuring Middle Eastern medium crude differentials and creating arbitrage opportunities. Meanwhile, Indian imports of Russian crude are expected to hit a record in June; Japan registered a 38.4% annual decline in imports in May, with increased purchases of US crude.
What to expect? The current scenario is short-term oversupply, with Gulf producers aggressively competing for market share via discounts, which is likely to keep differentials pressured in July. It is noteworthy that this increased supply will mainly come from the release of sanctioned Iranian barrels and the substantial inventories built up by Persian Gulf countries since the outset of the conflict.
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