Oil Prices Plummet Amid US-Iran Tensions and Surplus Forecast

Oil prices are on track to post their biggest quarterly loss since early 2020 due to ongoing US-Iran tensions and concerns over a strained interim ceasefire in the four-month-old war.

The Brent August crude futures contract, which expires today, was up 0.16% at $73.27 a barrel as of 0959 GMT, but is down about 20% so far this month and on track for its third straight monthly decline.

The uncertainty surrounding potential US-Iran talks in Doha has weighed on oil prices, which are close to pre-war levels. Morgan Stanley cut its 2027 Dated Brent forecast by $5 a barrel, citing expectations of a build-up in OECD commercial oil inventories and an implied global oil market surplus of 4.8 million barrels per day in 2027.

UBS analyst Giovanni Staunovo said that while the market has not priced out a risk premium, previously stranded ships have become available with the increase in ships moving out of the Gulf, creating a temporary wave of new supply.