OPEC production in June soared by 3.3 million barrels per day (bpd) to 19.43 million bpd, according to a Reuters survey, as Gulf producers restored supplies following the reopening of the Strait of Hormuz. Kuwait alone raised output from 580,000 bpd in May to 1.65 million bpd; Saudi Arabia added 550,000 bpd to reach 7.2 million bpd; and Iran increased by 510,000 bpd to 2.85 million bpd, though it remains roughly half a million barrels below pre-war levels. The sudden availability of crude has flipped the Brent market structure from backwardation to contango—prompt barrels now trade at a discount to forward contracts—and sent prices to their lowest since before the conflict began in late February, with Brent hovering near $72.

The supply recovery follows a memorandum of understanding between Washington and Tehran that ended the naval blockade of Iranian ports and allowed commercial shipping to resume transiting Hormuz. Saudi Aramco has switched to spot pricing to accelerate sales in Asia, and at least five supertankers carrying 10 million barrels of Saudi crude have exited the strait. Yet the diplomatic framework remains brittle. Analysts at Citi note that the dealmaking process “remains fragile” and that disputes over tolls and the administration of the waterway persist. A cross-border exchange of strikes last weekend after an Iranian attack on a cargo vessel underscored the risk of renewed disruption. Viewed from Tehran, the accord is a tactical pause, not a resolution; Iranian officials insist on their role in securing the strait, while Washington demands unconditional freedom of navigation.

The rush to recapture market share is reshaping producer dynamics. The UAE, which quit OPEC in May, exported a record 3.7 million bpd in June. Iraq is pressing for a larger quota within the alliance. Meanwhile, China’s crude imports remain depressed, compounding the oversupply. Investment banks have turned decisively bearish: Citi recommends selling rallies and sees Brent at $60–65 by year-end; Goldman Sachs forecasts a global surplus of about 3 million bpd next year, only partially absorbed by strategic stockpile rebuilding. Morgan Stanley has slashed its 18-month price outlook. Stock markets rallied on the peace news, but S&P Global Market Intelligence cautions that its baseline still assumes Dated Brent averaging $110 in 2026—nearly 90% above pre-conflict assumptions—because the full restoration of Gulf production will be gradual and U.S. crude inventories have fallen to multi-decade lows.

The OPEC+ alliance, which includes Russia, is expected to approve a further modest increase of 188,000 bpd for August at its virtual meeting on Sunday, continuing the phased unwinding of voluntary cuts. The more consequential milestone is the durability of the U.S.-Iran understanding, which enters a formal negotiation phase in Switzerland. The International Atomic Energy Agency has announced it will resume inspections of Iranian nuclear facilities, a key element of the 14-point roadmap. Whether the tentative calm in energy markets holds will depend on progress in those talks and on parallel efforts to stabilise the Israel-Lebanon front, where a separate agreement faces implementation hurdles.