Oil Markets React to Supply Disruptions and Inventory Changes

Global oil markets faced continued pressure this week from supply disruptions at the Strait of Hormuz and tightening inventories. Oil prices rose modestly even as media reports described possible negotiations between the U.S. and Iran. The largest U.S. crude inventory drawdown on record produced only a minor price increase. European macroeconomic data reached its weakest levels since 2023.

ICE Brent crude traded near $105 per barrel. OPEC+ members are expected to approve an additional 188,000 barrels per day production increase for July. This decision comes despite a reported 10 million barrels per day drop in Gulf states' output since the Hormuz Strait blockade began.

The UK government suspended sanctions on diesel and jet fuel refined from Russian crude in third countries. Officials described the change as a response to current fuel supply conditions. Japan received its first crude cargo through the Strait of Hormuz since the blockade started. Three supertankers carrying six million barrels exited the strait in recent days.