Brent Pressured by Rising Supply

Brent traded around $72 per barrel on Tuesday, hovering near its lowest level in more than four months as signs of rising supply continued to weigh on prices, while vessel traffic through the Strait of Hormuz kept recovering. Reports showed that at least eight Japan-linked ships exited the strategic waterway via a route near Iran, including five supertankers capable of carrying 2 million barrels of crude each. Meanwhile, Saudi Arabian oil giant Saudi Aramco cut the price of its Arab Light crude for Asian buyers next month by $11 a barrel to a $1.50 discount against the regional benchmark, reflecting softer market conditions. The last two times the company offered the grade at a discount were during oil price wars in 2020 and 2015. The price cut came after OPEC+ members, led by Saudi Arabia, agreed over the weekend to increase production quotas for next month, reinforcing expectations of stronger global supply.

Brent Crude oil traded below $72 a barrel on Monday, hovering near its lowest levels since late February as maritime flows through the Strait of Hormuz steadily recovered and OPEC+ signaled an increase in global supplies. OPEC+ members approved a quota increase of 188,000 barrels per day for next month, continuing a progressive unwinding of long-standing production curbs as market conditions normalize. Major Persian Gulf producers are rapidly accelerating output, with Saudi exports approaching pre-war levels. Also, the United Arab Emirates, which exited OPEC during the recent regional conflict, has fully restored its shipping flows. Meanwhile, oil and gas tanker traffic through the Strait of Hormuz showed signs of normalizing, after several vessels made unexplained U-turns and detours along the critical energy route. Meanwhile, Saudi Arabia reduced the selling price of its main crude grade to Asia, lowering the August premium to a $1.50 per barrel discount to the Oman/Dubai benchmark.

Brent traded below $72 per barrel on Monday, hovering near its lowest levels since late February as recovering energy flows through the Strait of Hormuz and expectations of higher OPEC+ output fueled concerns over a potential supply glut. OPEC+ members approved another modest increase in collective production quotas for next month, with seven countries led by Saudi Arabia and Russia agreeing to raise output by 188,000 barrels per day. The decision reflects the group’s confidence in boosting production as conditions across the Middle East continue to stabilize. Major Persian Gulf producers have also been increasing supply, with Saudi Arabia’s exports climbing close to pre-war levels, while the UAE, which left OPEC during the conflict, has likewise restored shipments. Meanwhile, oil and gas tanker traffic through the Strait of Hormuz showed signs of normalizing on Sunday, a day after several vessels made unexplained U-turns and detours along the critical energy route.