Morning Highlights: Brent at $72, Largest Quarterly Loss Since 2008; Indirect U.S.-Iran Talks Underway in Doha, Vance Claims Hormuz Flows Restored to Pre-War Levels

Wednesday, July 1, 2026

Market Snapshot Brent (September) $72.22 | WTI (August) $68.82 Brent -0.73 (-1.0%), WTI -0.68 (-1.0%). Brent fell approximately $45 in Q2, its largest quarterly loss since the 2008 global financial crisis. WTI down approximately $31 in Q2, largest quarterly loss since COVID-2020. Analysts cut 2026 oil price forecasts for first time since the war began per Reuters poll. Indirect U.S.-Iran talks underway in Doha with Qatar and Pakistan mediating; Kushner and Witkoff in Doha but Iran meeting only with mediators not directly; Vance claims Hormuz flows restored to pre-war levels; API shows crude draw last week; EIA data due today; South Bow and Bridger announce Guernsey-to-Cushing pipeline project.

Bottom Line

The Q2 price collapse -Brent down $45, its worst quarter since the 2008 financial crisis- is the headline that contextualizes everything else this morning. The entire crisis premium built over the worst supply disruption in history has been more than fully reversed in two weeks of trading following the MOU announcement. The market has gone from pricing a catastrophic supply shortage to pricing a 2027 surplus of nearly 5 million bpd, and it has done so faster than any analyst model predicted.

The Doha diplomatic structure is the most important current development and it is more nuanced than the headline of talks underway suggests. Kushner and Witkoff are in Doha but Iran declined to meet with them directly, choosing instead to communicate through Qatari and Pakistani mediators. That indirect format is a meaningful downgrade from direct engagement and reflects the domestic Iranian political constraints that followed the weekend missile exchanges. Tehran cannot publicly be seen negotiating directly with Washington while Iranian officials are simultaneously asserting that vessels outside Iranian-defined Hormuz transit paths will be obstructed. The indirection is a face-saving mechanism that keeps the channel open without creating the optics of capitulation.

Vance claiming Hormuz flows have been restored to pre-war levels needs to be treated with the same caution applied to every official U.S. statement on this conflict throughout its four months. The tracking data shows Gulf exports at approximately 63% of normal levels on a seven-day moving average as of late last week. Pre-war levels would require approximately 20 million bpd through Hormuz. If Vance's claim is accurate it would represent a dramatic acceleration in the last few days that the shipping data had not yet confirmed. More likely it reflects a generous interpretation of the flow recovery that serves a domestic political narrative ahead of November midterms. EIA inventory data due today will provide a more reliable read on whether the physical supply restoration is translating into U.S. stock builds at the pace the market is pricing.

The Reuters poll showing analysts cutting 2026 oil price forecasts for the first time since the war began is the sentiment confirmation that the repricing is broad-based rather than driven by a handful of banks. After five consecutive months of upward revisions, the consensus is now moving in the opposite direction, which means the bullish analyst community that spent three months arguing for $100-plus Brent has rotated. That rotation itself has momentum - analysts who have already revised lower once are more likely to revise again if the supply recovery continues and the 60-day negotiations produce further de-escalation.

The South Bow and Bridger pipeline announcement is a longer-term infrastructure development that deserves note. A Guernsey-to-Cushing connection completing the Alberta-to-Cushing corridor - Prairie Connector's third leg - addresses the specific bottleneck that has constrained Canadian crude's ability to reach the Gulf Coast refining complex. With Q4 2028 targeted service, it arrives in a market that the Iran war has restructured in ways that permanently elevated the strategic value of North American supply routes. The Iran crisis accelerated every major supply diversification infrastructure project by years -- Trans Mountain's expansion, ADNOC's Fujairah pipeline doubling, the Texas GulfLink deepwater terminal, and now this - and those investments will reshape trade flows well into the next decade regardless of how the 60-day MOU negotiations conclude.

Top Developments

Indirect U.S.-Iran Talks Underway in Doha, Iran Declines Direct Meeting

Indirect technical talks between the U.S. and Iran are underway in Doha with Qatar and Pakistan serving as mediators, per a source with direct knowledge of the discussions. Kushner and Witkoff arrived in Doha on Tuesday for what the White House described as high-level talks, but Iran and host Qatar confirmed the Iranian side would meet only with mediators rather than directly with U.S. envoys. The indirect format keeps the 60-day MOU negotiation track alive while reflecting Tehran's domestic political constraints following the weekend missile exchanges. The key unresolved issues remain Iran's nuclear program, sanctions relief structure, frozen asset release and Hormuz legal status -- the same core questions that were deferred from the MOU into this negotiation window.

Brent Posts Largest Quarterly Loss Since 2008, Forecasts Cut for First Time Since War

Brent fell approximately $45 in Q2, its largest quarterly decline since the 2008 global financial crisis, as the MOU announcement triggered a rapid reversal of the crisis premium built over nearly four months of the worst supply disruption in history. WTI fell approximately $31, its largest quarterly loss since COVID-2020. A Reuters poll of analysts showed 2026 oil price forecasts were cut for the first time since the war began, following five consecutive months of upward revisions, as Hormuz reopening eased concerns over prolonged supply disruption and the 2027 surplus outlook took hold across the consensus. Morgan Stanley projects a 4.8 million bpd 2027 surplus and has cut its Brent forecast twice since the MOU was signed two weeks ago.

Vance Claims Hormuz Flows Restored to Pre-War Levels, EIA Data Due

U.S. Vice President Vance claimed oil flows through the Strait of Hormuz had been restored to pre-war levels, a more bullish characterization than tracking data through late last week had confirmed, which showed Gulf exports at approximately 63% of pre-war normal on a seven-day moving average. API data released Tuesday showed a further draw in U.S. crude stocks last week. EIA official inventory data is due today and will provide the most reliable current read on whether the physical supply restoration is translating into domestic stock builds at the pace the market is pricing. The first week of supply surplus hitting U.S. inventories would be a material price signal in the current environment.

South Bow and Bridger to Develop Guernsey-to-Cushing Pipeline, Completing Alberta Corridor

South Bow and Bridger Pipeline announced plans to jointly develop a new oil pipeline from Guernsey, Wyoming, to Cushing, Oklahoma, the third leg of a broader Alberta-to-Cushing corridor that would include the separately proposed Prairie Connector project from Alberta to Guernsey. The right-of-way was acquired from Tallgrass Energy's cancelled Liberty Pipeline project. South Bow targets restarting construction on its Prairie Connector segment around Q2 2027 with Q4 2028 service, having already secured required shipper commitments. The project would increase Canadian crude export capacity to the U.S. by more than 12% and address the specific absence of significant oil egress capacity from the Wyoming-Colorado area to major hubs. The Iran war accelerated the strategic case for North American supply infrastructure investment that will reshape global trade flows well beyond the current crisis.