Oil plunges below pre-war levels as Saudi supply rebounds

Global oil prices have crashed below pre-war levels after Saudi Arabia restored crude exports toward normal rates from its Ras Tanura terminal, deepening oversupply concerns. Brent futures in London slipped to near $70 per barrel on July 2, 2026, the lowest since the week before the Iran war began on February 28, 2026. The price drop follows Saudi Arabia’s rapid recovery in crude shipments, with vessel-tracking data showing the kingdom loading crude at nearly 90% of previous levels after restarting exports late last week. U.S. benchmark West Texas Intermediate also fell to near $67 per barrel. The supply rebound mirrors the United Arab Emirates’ recovery, which restored exports to pre-conflict levels of more than 3.9 million barrels per day last month. A U.S. official estimates that oil flows through the Strait of Hormuz now exceed 10 million barrels per day, intensifying the market glut despite wartime supply adjustments such as emergency reserve releases and reduced Chinese imports. Brent futures are trading in a bearish contango structure, signaling short-term oversupply with discounts on near-term contracts and plunging premiums for physical crude. “A wave of oil is about to enter the market,” said Natasha Kaneva, head of commodities research at JPMorgan Chase & Co. “And here lies the paradox. The surge in oil supply is about to collide with a market that, at least for now, simply does not need it.” Saudi Arabia has begun selling millions of barrels on an ad hoc basis to Asian customers as it resumes Persian Gulf shipments. Brent futures have continued their steep decline after the biggest quarterly drop since the 2020 pandemic, losing over 40% from their wartime peak. Flows through Hormuz—connecting Persian Gulf producers to global buyers—continued over the weekend despite regional tensions, easing fears of an inflationary oil-price spike. “The market is currently being flooded with crude oil,” said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. “Ample volumes of oil are putting pressure on the front end.” Qatar announced that indirect U.S.-Iran talks would be scheduled after funeral processions for Iran’s former supreme leader Ali Khamenei, killed at the start of the conflict. Ceremonies began July 4 and are expected to continue for days, according to Iranian state media. Ahead of the talks, Iran reiterated its determination to control shipping through Hormuz, one of several unresolved issues including Iran’s nuclear program and fighting in Lebanon. U.S. President Donald Trump reiterated on July 1 that Iran cannot have a nuclear weapon. The pace at which the supply glut dissipates will depend on a rebound in Chinese demand and the speed at which governments replenish depleted inventories, JPMorgan noted. Total U.S. stockpiles have fallen to the lowest level since March 2025, with inventories excluding strategic reserves at around 1.2 billion barrels after 12 straight weeks of declines.