BY COMFORT OGBONNA
Oil prices posted modest gains on Thursday as traders adjusted positions ahead of the long U.S. Independence Day holiday weekend, while markets continued to monitor developments in Middle East peace negotiations and global crude supply.
Despite the slight increase, both major crude benchmarks finished the week lower as concerns over supply disruptions eased and investors focused on improving oil flows through one of the world’s most important energy shipping routes.
Brent crude settled at $71.80 per barrel, gaining 23 cents, or 0.32%, while U.S. West Texas Intermediate (WTI) crude closed at $68.69 per barrel, up 11 cents, or 0.16%.
Earlier in the trading session, both benchmarks briefly fell to their lowest levels since before the conflict involving the United States, Israel, and Iran escalated in late February. For the week, Brent declined 0.60%, while WTI lost 0.78%, reflecting continued uncertainty over the balance between global supply and demand.
Market participants said much of Thursday’s buying was driven by short covering, as traders closed bearish positions before the holiday weekend. Attention has shifted away from fears of major supply disruptions and toward expectations that global oil production will remain sufficient to meet demand.
Investor sentiment also improved after Qatar announced that the United States and Iran had made progress during recent diplomatic discussions aimed at securing a permanent peace agreement following months of conflict that disrupted shipping through the strategically vital Strait of Hormuz.
According to Qatar’s Foreign Ministry, negotiations produced positive developments regarding the framework that helped bring an end to the fighting in June. However, officials cautioned that no final agreement has yet been reached, and further negotiations are expected to resume after memorial events honoring Iran’s late Supreme Leader, Ayatollah Ali Khamenei, conclude after July 9.
Energy analysts noted that crude oil exports through the Strait of Hormuz have continued largely uninterrupted in recent weeks, easing fears of severe supply shortages. At the same time, governments have released oil from strategic reserves, while demand growth from China has remained weaker than many analysts had anticipated.
These factors have combined to keep downward pressure on crude prices, although some analysts believe the current weakness could eventually give way to a rebound if global demand strengthens later in the year.
Shipping data showed that at least five supertankers carrying approximately 10 million barrels of Saudi crude recently departed from Ras Tanura after successfully passing through the Strait of Hormuz. Reports also indicated that Saudi Aramco has increasingly relied on spot pricing to accelerate crude sales to Asian customers, helping maintain strong export flows despite ongoing geopolitical uncertainty.
Analysts said the availability of crude oil is currently not the primary concern for refiners. Instead, refining capacity and the ability to process crude into finished fuels have become more significant constraints in some markets.
Supporting prices, fresh U.S. government data showed that domestic crude inventories fell to their lowest level since 2018 during the previous week as refinery activity increased. Gasoline stockpiles also declined, signaling healthy fuel consumption despite broader concerns about slowing global economic growth.
Several financial institutions have adjusted their outlooks in response to improving supply conditions. UBS lowered its Brent crude price forecasts, citing increased oil shipments through the Strait of Hormuz and expectations that global supplies will remain more than adequate.
The bank reduced its third-quarter Brent forecast by $25 per barrel to $80 and also lowered its fourth-quarter estimate to the same level. Its longer-term outlook for 2027 was trimmed to $75 per barrel.
Meanwhile, analysts at HSBC maintained a more optimistic view, suggesting that markets should be able to absorb additional Middle Eastern crude supplies through gradual inventory rebuilding and the conclusion of strategic oil stock releases by the International Energy Agency later this month.
According to HSBC, once the current period of excess supply fades, Brent crude prices could recover toward $80 per barrel or potentially move even higher if demand continues to strengthen.
In a notable development for the global energy industry, Nigeria became the first member of Organization of the Petroleum Exporting Countries to join the International Energy Agency as an associate member. The move is expected to strengthen cooperation between the world’s leading energy advisory body and Africa’s largest oil producer, potentially improving collaboration on energy security, market analysis, and long-term investment strategies.
Elsewhere, geopolitical tensions remained in focus after Ukrainian military officials reported that their forces had struck the Lukoil-Nizhegorodnefteorgsintez refinery in Russia’s Nizhny Novgorod region. The attack highlighted the ongoing risks facing global energy infrastructure as the conflict between Russia and Ukraine continues.
While oil prices remain under pressure from improving supply conditions and cautious demand growth, traders continue to closely monitor geopolitical developments, inventory trends, and diplomatic negotiations, all of which are expected to play a significant role in determining the direction of energy markets in the weeks ahead.
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