Oil prices post steepest quarterly and monthly losses since 2020, and analysts see glut ahead

[Data analyzing in commodities energy market: the charts and quotes on display. US WTI crude oil price analysis. Stunning price drop for the last 20 years.]
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Crude futures ended the day, the month, and the quarter lower on Tuesday alongside the reopening of the Strait of Hormuz, despite recent skirmishes and differences between the U.S. and Iran on control of the waterway.

Crude has fallen recently as the two countries continued talks, and oil tanker traffic is now showing signs of recovery [https://www.bloomberg.com/news/articles/2026-06-30/hormuz-traffic-picks-up-as-supertankers-sail-into-persian-gulf], picking up since the U.S. and Iran exchanged strikes over the weekend.

~24 commodity ships, including oil and liquefied natural gas carriers as well as bulk carriers, transited the Strait of Hormuz in both directions on Monday, and the trend continued on Tuesday, with a supertanker reappearing in the Persian Gulf, along with a number of smaller ships, Bloomberg reported, citing data from Kpler.

A move by supertankers into the Gulf rather than ships just trying to get out is a significant development, Arlan Suderman of StoneX said in a note.

The increased transit, along with Saudi exports via the Red Sea, "is close to rebalancing global supplies," given high U.S. exports and lower Chinese imports, Suderman said.

"We expect that by the end of July this is done," Goldman Sachs' co-head of global commodities research Samantha Dart said in a note. "Once we have a normalization of flows through the strait, the expectation is that we go into an oversupply."

Morgan Stanley also warned of a looming glut [https://www.bloomberg.com/news/articles/2026-06-30/morgan-stanley-cuts-oil-forecasts-on-fast-return-of-hormuz-flows], now modeling an implied global oil market surplus of 4.8M bbl/day ​in 2027, as flows through Hormuz return faster than expected.

The bank had pointed at the start of 2026 ​to a 2M-3M bbl/day surplus for the year, and the Strait of Hormuz closure ​temporarily flipped the surplus into a deep deficit.

Morgan Stanley analysts led by Martijn Rats also cut their Q4 2026 Brent oil forecast to $75/bbl from $80/bbl and their year-end 2027 oil prediction to $70/bbl from $80/bbl.

The Energy Information ‌Administration reported U.S. crude oil production climbed to 13.93M bbl/day in April, ​the highest monthly output on record, as producers responded to the oil price spike triggered by the Middle East war and the closure of the Strait of Hormuz.

Production rose by 216K bbl/day in April, with production in Texas edging 36K bbl/day ⁠higher to 5.83M bbl/day, the highest since November; output in New Mexico touching a record high ​of 2.37M bbl/day; and production from North Dakota, the third-largest producing state, rising to 1.13M bbl/day, also the highest since November.

Front-month Nymex crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) for August delivery plunged 31.4% during Q2 to $69.50/bbl, and front-month Brent August crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) sank 38.4% to $72.92/bbl, the largest quarterly percentage decline for both benchmarks since Q1 2020.

For the month, U.S. and Brent crude fell 20.4% and 20.8%, respectively; on Tuesday, Nymex slipped 1.7% and Brent dropped 0.3%.

Front-month Nymex natural gas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) for August delivery gained 13.5% to $3.275/MMBtu during Q2, its best quarterly percentage gain since Q4 2024.

For the month, U.S. natural gas edged 0.4% lower; on Tuesday, U.S. gas gained 2.9%.

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