Brent crude futures are on course for their largest quarterly decline since the first quarter of 2020, with the front-month contract down roughly 20% in June alone. By Tuesday, the August contract traded near $72.50 a barrel, a level last seen before the outbreak of hostilities in the Gulf in late February. West Texas Intermediate has shed around 19% this month, hovering just above $70. The sell-off has erased the geopolitical risk premium that had built up over four months of conflict, as tentative diplomatic moves between Washington and Tehran raise the prospect of a return to normal oil flows through the Strait of Hormuz.

The price retreat accelerated after the 17 June ceasefire agreement, which paused direct military exchanges and opened the door to technical talks. Shipping data shows tanker traffic through the strait has risen to its highest since the war began, with Goldman Sachs estimating that Gulf flows could return to pre-war levels of 23 million barrels per day by early July if the current pace of recovery holds. However, analysts in London caution that the market may have moved too fast. ING notes that supply is unlikely to normalise before the end of the third quarter, while UBS points out that a risk premium has not been fully priced out, as the ceasefire remains fragile.

Conflicting statements from the two capitals have injected fresh uncertainty. President Trump told reporters that talks in Doha could be “perhaps important, perhaps not,” while Iran’s foreign ministry denied any meetings were scheduled, saying its technical delegation’s visit to Qatar was unrelated to the American trip. The weekend exchange of missile strikes underscored the ceasefire’s fragility. Morgan Stanley cut its Brent forecast for the third quarter by $15 to $75 a barrel, citing faster-than-expected supply recovery, and now sees a global surplus of 4.8 million barrels per day by 2027. Middle Eastern producers continue to load oil and LNG despite the renewed attacks, according to shipping data, further easing supply fears.

The immediate focus remains on whether direct or indirect talks materialise in Doha and whether they can solidify the interim truce into a lasting arrangement. The 60-day implementation timeline for the 14-point memorandum of understanding has stalled, with both sides trading blame for violations. For oil markets, the key metric is the pace at which tanker traffic normalises; any setback in diplomacy could quickly reverse the recent price slide. The next factual milestone is the potential meeting in Doha, though its timing and format remain unconfirmed.