Oil prices fell about 1% on Thursday, extending losses for a third straight session, after Qatar said the US and Iran had made "positive progress" in indirect talks centred on the Strait of Hormuz, through which one-fifth of the world's oil supply moved before the June war.
A spokesperson for Qatar’s Foreign Ministry said the discussions achieved "positive progress" on issues related to the memorandum that ended the conflict. However, there was no indication that the two sides had moved closer to a lasting peace, Reuters reports.
Brent crude futures fell 77 cents, or 1.1%, to $70.80 a barrel by 0256 GMT, while US West Texas Intermediate crude declined 84 cents, or 1.2%, to $67.74 a barrel. Both benchmarks had dropped more than 1% in the previous session, touching their lowest levels in four months.
Market Pressure Builds
"As the strait stays open and crude oil flows out, there are growing expectations of oversupply and competition for market share is pushing prices down," Haitong Futures said in a note.
OPEC+ Output Expectations
Market sentiment was also weighed down by expectations that OPEC+ producers will approve another increase in output targets for August when they meet on Sunday, according to sources.
UBS lowered its Brent crude forecasts on Thursday, citing the US-Iran memorandum of understanding and the subsequent rise in oil shipments through the Strait of Hormuz. The bank reduced its average Brent forecast for the September quarter by $25 and for the December quarter by $10. It now expects Brent to average $80 a barrel in the second half of the year and $75 in 2027.
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"Despite this, we believe it is premature to assume a full normalisation, & see price risk skewed to the upside noting that inbound tankers to the Persian Gulf have lagged outbound tankers," UBS said.
Qatar’s Foreign Ministry also said the next round of talks between Iranian and US negotiators will take place after funeral processions for Iran’s late Supreme Leader Ayatollah Ali Khamenei on July 9.
