Oil falls as Hormuz exports recover, U.S.-Iran talks advance

(Bloomberg) — Oil prices declined for a third consecutive session as crude exports through the Strait of Hormuz continued to recover and indirect U.S.-Iran talks showed signs of progress, easing concerns over potential supply disruptions. 

Brent crude for September traded near $71/bbl after falling more than 3% over the previous two sessions, while West Texas Intermediate hovered around $68/bbl.

Crude exports through the strategic waterway have climbed above 10 MMbpd, according to a U.S. official, highlighting the market's growing confidence that shipments can continue despite recent hostilities. President Donald Trump also pointed to progress in indirect negotiations with Iran.

Qatar said the next round of talks will be scheduled as soon as possible following funeral ceremonies for Iran's former Supreme Leader Ali Khamenei, who was killed in an airstrike at the start of the conflict. The ceremonies are expected to begin July 4 and continue for several days, according to Iranian state media.

Oil has extended losses following its weakest quarterly performance since 2020 as exports through the Strait of Hormuz continue to rebound. While regional supplies remain below pre-conflict levels, exports from the United Arab Emirates have recovered to pre-war volumes through alternative shipping arrangements, while U.S. crude grades have weakened as international demand softens.

"Prices continue to drift lower as the gush of oil escaping the Strait of Hormuz coincides with SPR releases and curtailed demand, as flare ups between Iran and the U.S. remain contained at least for the time being," said Saul Kavonic, senior energy analyst at MST Marquee.

Despite the improving outlook for exports, Iran has reiterated its intention to maintain control over shipping through the Strait of Hormuz, underscoring that key issues—including Tehran's nuclear program and regional security concerns—remain unresolved. Trump reiterated Wednesday that Iran cannot be allowed to develop a nuclear weapon.

Meanwhile, U.S. commercial crude inventories have fallen for 12 consecutive weeks to their lowest level since March 2025, excluding the Strategic Petroleum Reserve.