HEAD OF RESEARCH REVIEW
The frenzy over geopolitical tensions between Israel and Iran that sent the oil price rocketing in June gave way to calmer price action in July. Brent consolidated in a range, sandwiched between its structural 100 and 200-day moving averages. With Middle Eastern oil supply disruption fears in the rearview mirror, the market took the opportunity to review global fundamentals against a backdrop of ongoing trade uncertainty. Brent flat price traded on either side of $69.50/bbl in July, while prompt structure on futures softened from above a dollar to around 78 cents at the time of writing, as did the prompt DFLs. In July, while the net position of money managers on the Brent futures rose, risk takers appeared hesitant to make large weekly increments. The US made headway regarding tariffs with key trade partners, such as Japan, the EU, and Korea, but India’s and China’s cases are still unresolved. In the meantime, OPEC+, following its virtual meeting on 3 August, fully rescinded its 2.2 mb/d voluntary cut decided back in November 2023, adding back 548 kb/d of notional barrels to the market. Heading into August, Brent traded above the psychological $70/bbl level only to quickly slip back. Finally, President Trump upped the pressure on the original BRICs countries through trade measures or sanctions, while unleashing new sanctions on Iran.
