Brent crude, the international benchmark, slid below $71 a barrel on Thursday, returning to levels last seen before the US-Iran conflict erupted in late February. The decline, which extended a rout that has wiped more than 40 per cent off the price since the war’s peak, came as the gradual reopening of the Strait of Hormuz drained the geopolitical risk premium that had inflated crude markets for months.

The catalyst was confirmation from Qatar that indirect talks between Washington and Tehran in Doha had made “positive progress” on restoring commercial shipping through the chokepoint, which before the war handled one-fifth of global oil supply. Tanker traffic through the strait has begun to recover, with a US official estimating flows now exceed 10 million barrels per day, though inbound vessel movements still lag behind outbound ones. The United Arab Emirates has restored exports to pre-war levels above 3.9 million barrels daily, while Saudi Arabia has resumed loading crude from its Ras Tanura terminal and sold spot cargoes to Asian buyers, adding to a sense of near-term oversupply.

The bearish signals extend beyond the strait. OPEC+ producers, led by Saudi Arabia and Russia, are expected to approve a further production increase of around 188,000 barrels per day for August when they meet on Sunday, according to sources briefed on the discussions. In the United States, commercial crude inventories fell by 3.8 million barrels last week, a smaller draw than analysts had forecast, while China’s crude imports have dropped 40 per cent in recent months. Analysts in Zurich at UBS slashed their Brent forecasts by $25 for the third quarter, to an average of $80, though they cautioned that it was premature to assume full normalisation given the still-fragile security situation.

The next milestone for markets is the OPEC+ meeting this weekend, which could cement expectations of rising supply. Diplomatically, the next round of US-Iran talks will be scheduled after funeral ceremonies for Iran’s late Supreme Leader, Ayatollah Ali Khamenei, which begin on 4 July. Tehran continues to insist on its right to impose transit tolls on vessels passing through the strait from mid-August, a demand that could reignite tensions if left unresolved.