The reopening of the Strait of Hormuz and the resumption of large-scale crude exports from the Persian Gulf have fundamentally altered the oil market’s supply outlook, shifting the dominant narrative from fears of disruption to expectations of a growing surplus. Brent crude, the international benchmark, traded around $72 a barrel on Friday, near its lowest since before the US-Israeli war on Iran began in late February, as the forward curve slipped into contango—a structure that signals ample near-term supply.

The shift follows a US-Iran memorandum of understanding that halted active hostilities in June and subsequent indirect talks in Doha, which Qatar’s foreign ministry described as yielding “positive progress.” The strait, which previously carried one-fifth of global oil and LNG flows, has seen a rapid rebound in tanker movements. Saudi Arabia has dispatched at least five supertankers carrying 10 million barrels, switching to spot pricing to accelerate sales into Asia. Kuwait’s production surged to 1.65 million barrels per day in June from just 580,000 bpd in May, according to a source familiar with the matter.

Viewed from London, analysts at Citi now project Brent could slide to $60 a barrel by end-2026, arguing that “fundamental factors are rapidly returning to the fore” as shipping normalises and Chinese buying remains absent. UBS slashed its third-quarter Brent forecast by $25, though it cautioned that inbound tanker traffic still lags outbound, keeping price risks skewed to the upside. In Washington, President Trump told CNBC that Iran had agreed to “practically everything” needed, reinforcing the diplomatic momentum. The US holiday weekend thinned trading, but prices edged higher as traders covered short positions ahead of the break.

The market’s attention now turns to two near-term events. OPEC+ producers are expected to agree on a further increase in output targets from August when they meet on Sunday, adding to supply pressure. Meanwhile, the next round of US-Iran negotiations is scheduled after funeral processions for Iran’s late Supreme Leader on July 9, a milestone that could determine whether the interim understanding evolves into a full agreement and further normalises energy flows.