July WTI crude oil (CLN26) fell $2.90, or 3.78%, to a 3.5‑month low, while July RBOB gasoline (RBN26) declined $0.0349, or 1.20%.
Oil and gasoline prices weakened amid a robust rally in the U.S. dollar index ($DXY), which reached a 13‑month high and exerted downward pressure on crude. The price dip followed President Trump’s signing of a preliminary agreement to end the U.S.–Iran war, which reopened the Strait of Hormuz and allowed millions of barrels of oil exports to resume, thereby boosting global supply.
In a Paris‑based memorandum of understanding, President Trump extended the U.S.–Iran ceasefire for 60 days, reopened the Strait of Hormuz, and launched new negotiations to permanently end the conflict. Resumption of vessel traffic is expected to release over 100 oil‑laden ships stranded in the Persian Gulf, injecting additional supplies into the market.
The International Energy Agency (IEA) warned that the war’s impact on demand will be deeper than previously thought, projecting a global oil consumption decline of 1.1 million barrels per day (bpd) this year—far steeper than its earlier estimate of 420,000 bpd. Goldman Sachs trimmed its Brent crude forecast to $80 per barrel for Q4, down from $90, and expects Persian Gulf exports to return to pre‑war levels by the end of July, one month ahead of prior expectations.
U.S. production outlook remains bearish, with the Department of Energy raising its 2026 crude output estimate to 13.72 million bpd, up from 13.65 million bpd in May. Meanwhile, Ukraine’s ongoing drone strikes on Russian oil infrastructure have provided price support. Russian crude‑processing rates averaged 4.32 million bpd in early June—the lowest in 20 years—while sanctions continue to curb Russian exports.
IEA’s May report noted that global inventories fell by roughly 4 million bpd in March and April, leaving the market “severely undersupplied” through October even if the conflict ends soon. Goldman estimates Persian Gulf output losses at about 14.5 million bpd, with nearly 500 million barrels drawn from global stocks—a shortfall that could reach one billion barrels by June.
OPEC delegates signaled a continuation of quota increases, aiming to restore the bulk of the 1.65 million bpd cut implemented in 2023 by September. Despite a planned OPEC+ boost of 188,000 bpd for June (following a 206,000 bpd rise in May), Middle East producers are cutting output due to the ongoing conflict. OPEC’s May production fell 3.36 million bpd to a 40‑year low of 16.33 million bpd.
Vortexa reported that oil stored on tankers idle for at least seven days declined 6.9% week‑over‑week to 76.5 million barrels in the week ending June 12.
The EIA’s June 12 report showed U.S. crude inventories 6.1% below the five‑year seasonal average, gasoline stocks 6.4% below average, and distillate stocks 12.9% below average. U.S. crude production edged up 0.1% to 13.806 million bpd, slightly below the November 2024 record high of 13.862 million bpd.
Baker Hughes reported that active U.S. oil rigs rose by two to 433 in the week ending June 12, an 11‑month high, though still well under the 5.5‑year peak of 627 recorded in December 2022.
