Morning Highlights: Brent at $70.50, Lowest Since Day Before War, as Doha Talks Show Positive Progress; Iran Asserts Hormuz Control by Force if Necessary, Next Round Delayed Until After July 9

Thursday, July 2, 2026 | 6:00 AM ET

Brent (September) $70.50 | WTI (August) $67.52 Brent -1.07 (-1.5%), WTI -1.06 (-1.5%), lowest levels since February 27. Five Ras Tanura VLCCs carrying 10 million barrels of Saudi crude have already exited the strait. Next U.S.-Iran negotiating round delayed until after July 9. Qatar confirms positive progress in Doha talks on MOU matters; Iran insists on internationally recognized Hormuz control and fee-levying rights including by force if necessary; OPEC+ expected to agree further August output hike Sunday; UBS cuts Q3 and Q4 Brent forecasts to $80; Aramco offering July crude on spot pricing basis to attract Asian demand.

Bottom Line

Brent at $70.50 is the lowest since the day before the war started. The entire supply crisis premium has been erased and the market is beginning to price the 2027 surplus that multiple banks have now projected at 4 to 5 million bpd. The physical supply recovery is real - five Ras Tanura VLCCs carrying 10 million barrels have already cleared the strait with four more at the terminal loading or waiting and UBS's Staunovo correctly identified the mechanism: previously stranded tankers exiting the Gulf are the immediate headwind, and that flow will persist for several more weeks as the backlog clears.

The two senior Iranian sources telling Reuters that Iran is determined to win international recognition of its Hormuz control and fee-levying rights, including by force if necessary, is the hardest Iranian public statement on Hormuz sovereignty since the conflict began and it deserves to sit next to Qatar's positive progress characterization simultaneously. Both can be true: technical progress on MOU implementation details while Iran's stated strategic objective remains permanent institutionalized sovereignty over the waterway that the U.S. has explicitly rejected and sanctioned. The gap between those two positions is what the 60-day negotiation window is supposed to resolve, and the next round being delayed until after July 9 narrows the time available.

The near-term mini-glut from stranded tanker backlog release is a temporary phenomenon with a finite duration. As it fades and IEA strategic reserve releases end in July, the restocking demand that the IEA identified as the floor under prices should reassert itself. OECD commercial stocks bottoming in July at their lowest since April 2014, SPR at 1983 lows requiring rebuilding, and global strategic stockpiling demand of over 1 million bpd from 2027 are the structural demand factors that have not changed. The path back toward $80 that HSBC identifies depends on the mini-glut clearing without a renewed escalation disrupting the recovery.

Aramco switching to spot pricing on July-loading crude is a telling commercial signal. OSPs set in early June at premiums of $6 to $10 per barrel are now uncompetitive versus other Middle Eastern spot cargoes trading at discounts following the deal. The world's largest oil exporter departing from its standard long-term contract pricing model to move barrels reflects how quickly the supply dynamic has shifted - from a seller's market where buyers scrambled for any available Gulf crude to a buyer's market where producers are competing aggressively for the same refiners who spent three months sourcing alternatives.

Top Developments

Doha Talks Make Positive Progress, Next Round Delayed Until After July 9

Qatar's Foreign Ministry confirmed indirect U.S.-Iran technical talks in Doha made positive progress on MOU-related matters, though no headway toward a lasting peace was reported. Kushner and Witkoff participated through Qatari and Pakistani mediators rather than direct engagement with Iranian counterparts. The next negotiating round will take place after July 9, narrowing the time available within the 60-day MOU window to resolve the core issues of nuclear program limits, sanctions relief structure, frozen asset release and Hormuz sovereignty. Iran's Deputy FM Gharibabadi confirmed Iranian and Omani experts will begin talks on redefining Hormuz transit paths, with Iran stating it will attempt to obstruct vessels outside those defined routes.

Iran Asserts Permanent Hormuz Control Rights Including by Force

Two senior Iranian sources told Reuters that Iran is determined to win international recognition of its control over the Strait of Hormuz and its right to levy transit fees, including by force if necessary. The statement comes simultaneously with Qatar's positive progress characterization of the Doha talks, reflecting the gap between technical MOU implementation discussions and the core strategic disagreement on waterway sovereignty. The U.S. has sanctioned Iran's Persian Gulf Strait Authority, explicitly rejected any transit fee framework and stated Iran will not be able to close the strait again. Those positions remain far apart and the 60-day window is the vehicle for attempting to bridge them.

Five Ras Tanura VLCCs Clear Strait With 10 Million Barrels, Aramco Offers Spot Pricing

Five supertankers carrying approximately 10 million barrels of Saudi crude loaded at Ras Tanura have exited the strait, with cargoes heading to Sinochem's Quanzhou refinery, Shenghong Petrochemical in Lianyungang and Japanese ports. Four more VLCCs are at or near Ras Tanura -- three waiting to load and one fully laden. Aramco is offering July-loading crude to Asian customers on a spot pricing basis, a departure from its standard OSP long-term contract model, as July OSPs set in early June at premiums of $6 to $10 per barrel are uncompetitive versus other Middle Eastern spot cargoes now trading at discounts. One source described the spot pricing as very attractive for Chinese buyers. August OSPs are expected to be cut sharply. UBS cut its Q3 and Q4 2026 Brent forecasts to $80 and trimmed its 2027 outlook to $75, citing recovering Hormuz flows from stranded tankers as the near-term price headwind.

HSBC Sees Mini-Glut Fading, Path Back to $80; OPEC+ to Hike August Targets Sunday

HSBC analysts expect the market to absorb returning Middle East barrels through gradual restocking alongside the end of IEA strategic reserve releases in July, with the near-term mini-glut from backlog clearance fading to support a Brent move back toward $80 or higher. OPEC+ members are expected to agree a further August output target increase when they meet Sunday, though the practical impact remains limited while Gulf production restoration is still working through infrastructure and logistics constraints. The structural floor under prices -- OECD commercial stocks at multi-year lows, SPR at 1983 lows, strategic stockpiling demand exceeding 1 million bpd from 2027 -- remains intact beneath the near-term supply surge from backlog release.