Oil prices dropped in early July 2026 after several days of increased oil flows through the Strait of Hormuz and signs of progress in US-Iran indirect negotiations to maintain a truce, according to multiple sources [1, 2]. Daily oil supply through the Strait exceeded 10 million barrels, signaling Iran's declining ability to block shipping lanes [1, 3]. The United Arab Emirates also resumed exports to pre-war levels by late June, supporting regional supply stability [1, 3].
US President Donald Trump said Iran agreed to most terms needed in talks to keep the 60-day truce in place and keep the Strait open [1, 2]. However, on June 29, fresh attacks on tankers and retaliatory strikes escalated military tensions between the US and Iran in the Gulf, disrupting shipping and causing a spike in oil prices [4, 5, 6]. These clashes led to slower shipments through the Strait despite earlier increases [4, 5, 6].
Saudi Aramco resumed oil loadings at its Ras Tanura terminal near the Strait on June 26 after almost four months of suspension, boosting supply volumes [4, 5, 6]. Gulf oil exports surged in June to about 10 million barrels per day, sharply up from May but still 40% below pre-war export levels [7, 3]. Kuwait notably tripled its production from 580,000 barrels per day in May to 1.65 million barrels in June [7].
Oil prices had posted their worst monthly and quarterly declines since the 2020 pandemic crash, with Brent crude sliding about 21% in June 2026 alone, erasing much of the geopolitical risk premium [8]. Analysts forecast a global oil surplus of 4.8 million barrels per day in 2027 due to sustained Gulf exports and OPEC+ output, putting further downward pressure on prices [8, 9]. Still, prices steadied in early July near $68-$72 per barrel amid fluctuating flows and uncertainty [1, 2, 7]. Tim Waterer, chief market analyst at KCM Trade, described the market as "cautiously optimistic," willing to believe peace efforts will hold but staying watchful for results [7].
Renewed tensions caused a brief price spike on July 8, pushing Brent crude above $78 per barrel over supply disruption fears [10]. Following the late-June clashes, the US and Iran scheduled a new round of technical-level talks in Doha on June 30 to try to stabilize the Strait [4, 5, 6]. Analysts including Phil Flynn of Price Futures Group said the market increasingly trusts oil will keep flowing through the Strait, with strong crude and products volumes expected [5]. Others cautioned that assumptions about quick Gulf production recovery might be reassessed [4].
Despite turmoil, reopening the Strait has supported aviation sector growth in East Asia, where Taiwanese airlines reported record revenue increases in May amid stable fuel costs [11]. The next key event will be the Doha talks and whether they break the recent cycle of military clashes and allow more consistent shipping volumes through the Gulf.
