Oil prices experienced a rise on Friday but were still on track for their steepest weekly decline since March 2023. This drop in prices followed a reduction in risk perceptions linked to the ongoing Iran-Israel conflict, which has not led to significant supply disruptions. By 0830 GMT, Brent crude futures had increased by 54 cents, or 0.8%, reaching $68.26 a barrel, while U.S. West Texas Intermediate crude experienced a similar boost, gaining 60 cents, or nearly 0.9%, to settle at $65.83. The conflict that began with Israel’s targeting of Iran’s nuclear facilities on June 13 initially caused a spike in Brent prices, which briefly exceeded $80 a barrel.
However, prices plummeted to around $67 following U.S. President Donald Trump’s announcement of a ceasefire. As a result, both oil contracts are projected to see a weekly decrease of approximately 12%. Rystad analyst Janiv Shah commented that the market has largely dismissed the geopolitical risk that had been prevalent just a week prior, shifting focus back to fundamental factors. The upcoming OPEC+ meeting scheduled for July 6 is also in view, where members will discuss production levels for August.
Despite the recent price volatility, there are indications of tightening, particularly with reports of strong draws in middle distillates. Tamas Varga from PVM Oil Associates noted that the independently held gasoil stocks in the Amsterdam-Rotterdam-Antwerp (ARA) region have dropped to their lowest level in over a year, alongside declines in Singapore’s middle distillate inventories. Additionally, June saw a surge in Chinese imports of Iranian oil, reflecting increased shipments and a revival in demand from independent refineries. As the leading global oil importer, China bought over 1.8 million barrels per day of Iranian crude from June 1-20, marking a record high according to maritime tracking data.