July WTI crude oil (CLN26) on Monday closed down -1.78 (-2.32%), and July RBOB gasoline (RBN26) closed down -0.0079 (-0.26%).
Crude oil and gasoline prices gave up overnight gains on Monday and settled lower. Crude prices retreated on Monday amid signs of progress in US-Iran peace talks, including a waiver on some Iranian oil sanctions. Also, the reopening of the Strait of Hormuz is allowing crude supplies to flow, easing global oil supply concerns. Crude prices initially opened higher in overnight trade when Iran threatened to suspend talks and close the Strait of Hormuz following Israeli attacks against Hezbollah in Lebanon, and after President Trump threatened military action against Iran if Hezbollah militants continue to attack Israel.
However, crude prices gave up their overnight advance and sold off on Monday when Iran said there had been "major progress" in all-night discussions with the US over a peace deal following the interim agreement last week that led to a 60-day ceasefire extension and Iran opening the Strait of Hormuz. Pakistan and Qatar said in a joint statement on Monday that there was "encouraging progress" in talks and that the US and Iran agreed to establish a "high-level committee" to oversee the talks, as well as working groups dealing with nuclear issues and sanctions on Iran. There will also be a "de-confliction cell" to help ensure the cessation of military operations in Lebanon.
Losses in crude oil accelerated on Monday after the US authorized a temporary, 60-day license allowing Iran to sell crude oil and petroleum products through August 21.
The resumption of vessel traffic through the Strait of Hormuz could lead to the release of more than 100 laden ships carrying oil from Middle Eastern countries other than Iran that are stuck in the Persian Gulf, effectively releasing stockpiles into the market.
The International Energy Agency (IEA) last Wednesday warned that the Iran war's impact on global oil demand will be much deeper than previously anticipated, saying world oil consumption will decline by -1.1 million bpd this year, a larger drop than a previous estimate of -420,000 bpd.
Goldman Sachs last Tuesday cut its Brent crude price forecast to $80 a barrel in Q4 of this year, down from $90, and said it expects Persian Gulf crude exports to return to pre-war levels by the end of July, one month earlier than previously expected.
The outlook for higher US crude output is negative for oil prices. The Department of Energy (DOE) on June 9 raised its US 2026 crude production estimate to 13.72 million bpd from a May estimate of 13.65 million bpd.
Crude prices have support from the continued Ukrainian drone attacks on Russian oil infrastructure. According to EA Analytics, Russian crude-processing rates averaged 4.32 million bpd in the first 10 days of June, the lowest in 20 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. According to Bloomberg, Ukrainian forces have struck three Russian fuel-producing facilities this month, following a record 17 attacks in May. US and EU sanctions on Russian oil companies, infrastructure, and tankers have also curbed Russian oil exports.
The IEA said in a monthly report released in May that global oil inventories declined at about 4 million bpd in March and April, and that the market will remain "severely undersupplied" until October, even if the conflict ends soon. Goldman Sachs estimates that crude output in the Persian Gulf has been curtailed by about 14.5 million bpd, and that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, which could hit a billion bbl by June.
As a bearish factor for crude, OPEC delegates said on May 14 that the cartel aims to continue a series of oil quota increases over the next few months, completing the return of halted oil production by the end of September. The group already formally agreed to restore about two-thirds of the 1.65 million bpd supply cutback it made back in 2023 and said it plans to raise output targets further and to revive the final portion in three more monthly stages. On May 3, OPEC+ said it will boost its crude output by 188,000 bpd in June after raising production by 206,000 bpd in May, although any production hike now seems unlikely given that Middle East producers are being forced to cut production due to the Middle East war. OPEC's May crude production fell by -3.36 million bpd to a 40-year low of 16.33 million bpd.
Vortexa reported on Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -4.1% w/w to 90.86 million bbl in the week ended June 19.
Last Wednesday's EIA report showed that (1) US crude oil inventories as of June 12 were -6.1% below the seasonal 5-year average, (2) gasoline inventories were -6.4% below the seasonal 5-year average, and (3) distillate inventories were -12.9% below the 5-year seasonal average. US crude oil production in the week ending June 12 rose +0.1% w/w to 13.806 million bpd, mildly below the record high of 13.862 million bpd posted in the week of November 7.
Baker Hughes reported last Thursday that the number of active US oil rigs in the week ended June 19 was unchanged at an 11-month high of 433 rigs, up from the 4.25-year low of 406 rigs posted in December 2025. However, the number of US oil rigs remains sharply below the 5.5-year high of 627 reported in December 2022.
