Brent Slips as Middle East Risks Ease and China Demand Falls

Brent dropped about 5% to below $84 per barrel on Monday after surging over 20% in July, as President Donald Trump announced that peace talks with Iran will resume today after he canceled a planned military strike against the Islamic Republic. Trump said key Middle Eastern allies, including Saudi Arabia, urged him to suspend the attacks and prioritize negotiations, while reiterating his call for the swift reopening of the Strait of Hormuz. Last month, Brent prices climbed about 25% after renewed hostilities between the US and Iran shattered the interim peace agreement, with supply disruptions extending from the Strait of Hormuz to the Red Sea. Meanwhile, major OPEC+ producers approved another modest increase in production quotas, completing the planned restoration of output cuts introduced in 2023 and leaving room to boost supplies further once the Middle East conflict comes to an end.

Brent crude oil prices rose 1.2% to near $88 a barrel on Friday, posting a nearly 24% gain in July, its strongest monthly increase since March, driven by escalating geopolitical tensions and growing concerns over global oil supplies. Iran claimed it attacked two tankers transiting the Strait of Hormuz under US military escort, though Western maritime authorities have not confirmed the incident. Renewed conflict between the US and Iran, Houthi attacks in the Red Sea, and Saudi strikes on Iran-backed groups have heightened risks to key shipping routes. Falling US crude inventories have added further upward pressure on prices. Meanwhile, attacks near Russia’s Black Sea oil export infrastructure, including the Caspian Pipeline Consortium (CPC) terminal, have raised concerns about disruptions to Kazakhstan’s oil exports, an important source for European refiners. Although the CPC decided to continue operations, uncertainty over supply security continues to support higher oil prices.

Brent crude oil climbed above $88 a barrel on Friday, extending its monthly advance to more than 20% amid renewed hostilities between the US and Iran and reports that some tankers were forced to turn around in the Strait of Hormuz. According to Iran’s Fars news agency, the Revolutionary Guards stopped two tankers from passing through the waterway, while four others altered course. Even so, Kpler ship-tracking data showed that two very large crude carriers loaded in the Gulf successfully exited the Strait on Friday. The conflict has intensified this month as a temporary pause in fighting between Washington and Tehran collapsed, Yemen’s Houthis became more involved, and Saudi forces joined US operations against Iran-backed groups in Iraq. Separately, declining US crude inventories and a Ukrainian strike on Russia’s Volgograd oil refinery added to concerns over global supply.