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Informist, Wednesday, Jul. 8, 2026

 

MUMBAI – Crude oil flows from the Persian Gulf region are recovering fast but this is unlikely to cause oversupply in the short term amid lingering uncertainties over a peace deal between the US and Iran, according to Commerzbank Research. The necessary replenishment of depleted stocks held in reserve across the world is likely to absorb a considerable portion of the oversupply expected next year. The volume required for replenishment of stocks in the near future will be around 450 million barrels, the research firm said in a note.

 

International crude oil prices fell 30% in Apr-Jun, their biggest quarterly fall since the coronavirus pandemic. The immediate shock from the West Asia war had pulled prices up more than 70% at one point, which has now been completely erased, mainly because supplies from the Gulf region have been recovering "unexpectedly quickly", according to Commerzbank Research.

 

After crude oil shipments through the Strait of Hormuz resumed, production from the Organization of the Petroleum Exporting Countries rose 3.3 million barrels per day in June, Commerzbank Research said, citing a Reuters survey. The increase was primarily driven by Kuwait, Saudi Arabia, Iran, and Iraq. Kuwait increased its crude oil production to 1.9 million barrels per day by the end of June. The United Arab Emirates, though no longer a part of OPEC, ramped up crude oil production to 3.8 million barrels per day.

 

Commerzbank Research cited Kpler data that showed oil exports from the Persian Gulf region increased to over 10 million barrels per day in June, while Vortexa reported an increase to 10.2 million barrels per day. Meanwhile, Saudi Arabia's oil exports are almost back to pre-war levels, at 6.3 million barrels per day. Vortexa reported that both Iraq and Kuwait's oil exports reached 800,000 barrels per day in June. The UAE increased oil exports to more than 1 million barrels per day in June, whereas Iran increased its exports by 70% to 640,000 barrels per day after the US lifted its naval blockade.

 

The number of oil tankers passing through the Strait of Hormuz last week was just 13, of which less than half left the Persian Gulf for the Gulf of Oman. Monday, the number of tankers jumped to 16, of which 13 left the Persian Gulf. Before the war, around 50 oil tankers--of which 30 would be carrying crude oil--would pass through the narrow strait on a daily basis. Since the US-Iran agreement, almost 90 million barrels have passed through the strait, Commerzbank Research said, citing a Bloomberg report. Monday, that number jumped to 13.8 million barrels, the highest since February.

 

OPEC's largest producer, Saudi Arabia, has sharply cut official selling prices, offering a discount to Asian buyers of $1.5 per barrel on Arab Light, bringing the price down by $11 over time, and lower than pre-war levels. The last time such a sharp drop had occurred was during the pandemic, Commerzbank Research said.

 

The seven members of OPEC and allies who had instituted voluntary production cuts have now agreed to raise their production targets by a further 188,000 barrels per day from August, as was widely anticipated. This is third increase in production of this magnitude in a row and the fifth since the resumption of gradual production increases in April. However, the target has stayed on paper only, as the blockade of the Strait of Hormuz forced member countries in the Gulf region to cut production. Even now that oil supplies have resumed, it is likely to take several months before the agreed production levels are reached, Commerzbank Research said.

 

"Price signals also suggest that oil supplies have risen more sharply than the official data indicate. This is because the front end of the Brent forward curve is in contango. Initially, only the first two futures contracts were affected. Last week, however, the contango structure extended to the first four contracts," the report said.

 

Crude oil shipments from the Strait of Hormuz are likely to remain severely restricted as it will take several more weeks, if not months, to remove the mines laid in the narrow waterway, according to the report. Iran's claim to retain control over the strait and levy a "service charge" on ships for transit are other risks to supplies from the region.  End

 

US$1 = INR 95.57

 

Reported by Upasika Singhal 

Edited by Shubhayan Bhattacharya

 

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