June 29 News
On Friday, June 26, international crude oil futures experienced a sharp pullback, as geopolitical risk premiums were rapidly unwound. The weekly price decline reached a recent high, with the U.S. crude oil benchmark contract falling below $70 per barrel for the first time since March. Market trading dynamics have completely shifted—from “panic over supply disruptions” to “expectations of ample supply.”
I. Market Overview: Both benchmark crude oils plunged across the board, with WTI falling below the $70 mark.
NYMEX August WTI crude oil: down $2.69, a price decrease of 3.74%, with a settlement price of $69.23 per barrel; the daily decline reached 8.73% compared to the previous day.
ICE August Brent crude: down $3.27, a price decrease of 4.34%, with a settlement price of $71.99 per barrel, marking a weekly cumulative decline of 10.65%; September Brent crude fell $2.90, with a weekly price decrease of 9.31%.
Refined oil products are weakening in tandem: In August, RBOB gasoline fell by 2.64%, and heating oil dropped by 3.33%, reflecting simultaneous pressure on demand for petroleum products. This round of sharp oil price decline is not driven by a single piece of news but rather by the concentrated release of four major negative fundamentals: the resumption of shipping traffic through the Middle East waterways, the agreement between Lebanon, Israel, and the U.S. on a ceasefire framework, increased oil and gas production in the U.S., and the extension of Russia’s price cap policy. Coupled with the ongoing back-and-forth conflict between the U.S. and Iran, which has intensified the tug-of-war between bullish and bearish forces, these factors have collectively weighed down oil prices.
II. Trend Analysis: Geopolitical Premium Gradually Easing & Shift in Supply-Demand Dynamics to Take Longer to Materialize
1. Geopolitical Factors: Geopolitical supply concerns have been significantly alleviated, and shipping capacity has been concentrated and released.
Hormuz Strait throughput is rebounding, and the market has fully digested the risk of supply disruptions.
The Strait of Hormuz carries nearly 30% of the world’s seaborne crude oil and has long been the key geopolitical factor underpinning higher oil prices. Following the outbreak of U.S.-Iran tensions in late February, navigation through the strait was disrupted, prompting the market to continuously trade at a premium for supply shortages. By late June, as the situation continued to ease, shipping data showed substantial improvement:
This week, crude oil shipments through the Strait reached their highest level since the conflict began at the end of February. With tanker traffic returning to normal, panic over potential closure of the waterway has rapidly subsided. Saudi Aramco has resumed crude oil loading at the Ras Tanura terminal, which had been shut down for nearly four months. Two ultra-large VLCC tankers, each with a capacity of 2 million barrels, are simultaneously loading crude oil, while another tanker is already waiting in line. As a result, accumulated crude oil stocks in the Gulf region are now being concentratedly shipped out. Relevant analysts point out that the rebound in outbound shipments through the Strait has directly triggered a wave of selling in the oil market, and the market generally expects that crude oil transportation routes will remain unimpeded going forward.
Although the current total shipping volume remains below pre-conflict daily averages, the ongoing recovery trend has reversed market expectations. The geopolitical premium—previously driven by risk aversion—has been steadily squeezed out, becoming the most significant driver behind the sharp drop in oil prices.
Lebanon, Israel, and the United States signed a tripartite ceasefire agreement, leading to a phased cooling of conflicts in the Middle East region.
On June 26, Lebanon, Israel, and the United States concluded four rounds of negotiations in Washington and signed a trilateral framework agreement on ceasefire and troop withdrawal, creating a window for easing localized conflicts in the Middle East. Previously, the market had been concerned that the Lebanon-Israel conflict could escalate and further disrupt crude oil shipments through the Persian Gulf. The implementation of the ceasefire agreement has directly eliminated the tail risk of an escalation in regional conflicts, thereby intensifying downward pressure on oil prices.
Bull-Bear Hedging Variable: The U.S.-Iran Conflict Keeps Flaring Up—Geopolitical Disruptions Have Not Completely Disappeared
During this round of oil price declines, geopolitical risks have not been completely resolved, creating a clear offset between bullish and bearish factors, which limits the downward space for oil prices: On June 25, commercial ships were attacked in the Gulf of Oman, and the maritime organization temporarily suspended the evacuation of stranded vessels. On Thursday, crude oil futures rose by more than 2% against the trend, reflecting the market's high sensitivity to the safety of shipping lanes. On June 26, the U.S. military launched strikes against Iran as retaliation for the attack on commercial ships. Early the next morning, Iran announced that it had thwarted the U.S. attack, indicating a back-and-forth in the confrontation between the two sides. The current market is characterized by "talking while fighting": A ceasefire framework agreement eases expectations of long-term conflict, but sporadic conflicts between the U.S. and Iran continue. If the safety of the shipping lanes is threatened again, oil prices will quickly rebound, and geopolitical risks remain an important support for oil prices in the medium to long term.
2. Supply and Demand Factors: Double Negative on the Supply Side: U.S. oil and gas drilling rigs significantly increase production, and Russia’s price cap policy is extended.
U.S. oil and gas drilling rigs expand significantly, boosting expectations for future crude oil production increases.
According to the latest rig data from Baker Hughes, as of the week ending June 26, the total number of U.S. oil and gas rigs increased by 10 for the week—the largest weekly increase since June 2022, four years ago—bringing the total to 573 rigs, the highest level since May 2025. Specifically, oil rigs rose by 7 to 440, reaching a new high since June 2025, while natural gas rigs increased by 3 to 125.
The number of drilling rigs serves as a leading indicator of crude oil production. The continued expansion of drilling rigs implies that the U.S. domestic crude oil supply will keep increasing in the future, further reinforcing global expectations of ample crude oil supply and putting downward pressure on the long- and medium-term oil price center.
Russia Extends Oil Price Cap Countermeasure, Unlikely to Change Global Supply Pattern in the Short Term
On June 26, Russia extended its export ban targeting the G7 and EU’s oil price cap to December 31, 2027. The original ban was set to expire on June 30. At its core, this policy prohibits the supply of Russian crude oil and refined petroleum products to foreign entities that have imposed price caps. Since coming into effect in 2023, the policy has been extended multiple times.
From a market impact perspective, this policy is more of a long-term strategic tool and will not change the current crude oil circulation pattern in the short term: Russian oil has already established an independent export channel to Asia outside of Western price caps, and the extension will not cause a short-term supply contraction. Therefore, its support for oil prices is limited and cannot offset the bearish pressures brought about by the resumption of shipping lanes and increased production in the United States.
III. Outlook for the Future Market: Short-term Weakness and Volatility, with Bottom Support in the Medium to Long Term
Crude oil analysts believe that, in the short term, with supply and demand remaining relatively loose, oil prices are likely to stay on the weaker side. The continued passage of tankers through the Strait of Hormuz, the concentrated export of Saudi Arabia’s accumulated crude oil stocks, and the increase in U.S. drilling activity—these three major supply-side factors continue to materialize, causing geopolitical premiums to keep being absorbed. As a result, oil prices are expected to fluctuate broadly around the $70 mark. However, should U.S.-Iran tensions escalate once again and shipping through the Strait of Hormuz face large-scale disruptions, risk-averse buying would quickly surge, restoring geopolitical premiums and triggering a temporary rebound in oil prices.
In the medium to long term, it will take time for the supply-demand dynamics to undergo a fundamental shift. On the one hand, with U.S. crude oil production capacity continuing to expand and Middle Eastern exports recovering, global crude oil supply is trending toward an oversupply situation. On the other hand, geopolitical tensions are unlikely to come to a complete end, and with crude oil inventories having fallen to historically low levels, there is bottom support preventing oil prices from falling sharply and making it difficult for prices to experience sustained, unilateral declines. Going forward, it will be crucial to closely monitor Strait shipping data, developments in U.S.-Iran conflicts, and changes in U.S. crude oil production levels.
