Brent Surges Past $80 on US-Iran Strikes After OPEC+ Output Hike Triggers 1.4% Monday Selloff

Mumbai, July 11: The global crude oil market experienced one of its most volatile weeks in recent months, as prices swung violently between supply concerns and geopolitical shocks.  

The week opened with prices tumbling more than 1% after OPEC+ agreed to raise output targets for the fifth consecutive month, only to witness a dramatic reversal mid-week as fresh hostilities erupted between the United States and Iran, pushing Brent crude briefly past the $80 per barrel mark.  

By Friday, prices had steadied near $76 for Brent and $72 for WTI, with both benchmarks on track for weekly gains of 5-6%, underscoring the market’s heightened sensitivity to geopolitical developments in the Middle East. 

OPEC+ Output Hike Triggers 1.4% Monday Selloff as Brent Falls Below $72 

Oil prices opened the week lower after OPEC+ agreed to increase production from August, raising concerns about higher global supplies. Brent crude fell 1.41% to $71.10 per barrel, while WTI slipped 1.16% to $67.89. The decline followed Sunday’s OPEC+ decision to raise output by 188,000 barrels per day (bpd) for August, marking the fifth consecutive monthly production increase. 

The decision, announced after a virtual meeting of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, builds on similar increases implemented in June and July. Although the alliance continues to unwind voluntary production cuts introduced in April 2023, the actual increase in supplies has remained constrained because disruptions in the Strait of Hormuz have limited exports from several Gulf producers. 

Also Read: How to invest in crude oil 

Analysts at PVM noted that OPEC+ was increasing production into a weakening market, although lower prices could eventually stimulate demand. Meanwhile, Gulf oil exports rose by more than 3 million bpd in June to exceed 10 million bpd, though they remained well below pre-conflict levels. Abu Dhabi National Oil Company also sold around 16 million barrels of crude through its latest spot tender at wider discounts, while Russian exports from western ports remained near record highs. ANZ expects global oil demand to contract by 1.5 million bpd in 2026, reflecting slowing economic activity. 

Flows Through Hormuz Show Signs of Recovery as Shipping Corridor Reopens 

Oil prices remained under pressure as tanker movements through the Strait of Hormuz gradually resumed following weeks of disruption. Shipping activity along the US-protected corridor showed signs of improvement after several vessels that had previously altered their routes resumed normal transit. 

The reopening followed the earlier US-Iran ceasefire, which had helped Brent crude retreat sharply from wartime highs. Improved exports from Saudi Arabia and the United Arab Emirates also eased immediate supply concerns. Major Wall Street banks, including Citigroup, suggested Brent prices could fall further, with some forecasts pointing towards $60 per barrel by year-end if supply continues to recover and demand remains weak. 

Although exports from Gulf producers improved, the market continued to monitor vessel movements through Hormuz, which remains one of the world’s most important energy shipping routes carrying roughly one-fifth of global oil and LNG trade. 

US-Iran Ceasefire Collapses; Trump Declares Truce “Over” 

Market sentiment shifted dramatically during the week after renewed tensions between the United States and Iran reignited geopolitical concerns. Oil prices surged after US President Donald Trump declared the three-month ceasefire with Iran was “over”, citing continued attacks on commercial shipping in the Strait of Hormuz. 

The United States subsequently launched multiple airstrikes on Iranian targets, while Iran retaliated with attacks on US allies in the Middle East. The renewed conflict briefly pushed Brent crude above $80 per barrel, while WTI climbed to around $76 before easing later in the session. 

According to Rystad Energy, tanker traffic through the Strait of Hormuz had “essentially stopped” during the height of the tensions, with maritime intelligence showing no vessel transits through the Strait’s southern shipping lane on 8 July. The market rapidly priced in the possibility of fresh supply disruptions, making geopolitical developments the dominant driver of crude prices. 

Iran Targets US Military Sites in Bahrain and Kuwait as Strikes Escalate 

The conflict intensified after Iran increased pressure on shipping through the Strait of Hormuz and the United States responded by expanding military operations and revoking sanctions relief for Iran’s oil industry. Tehran then launched attacks on US military installations in Bahrain and Kuwait, while explosions were also reported across southern Iran, including near the Bushehr nuclear facility. 

President Trump indicated that additional military action remained possible and also floated the idea of reimposing a blockade on vessels travelling to and from Iranian ports. 

Despite the escalation, analysts noted that the conflict had not directly targeted major oil production infrastructure. ANZ’s Daniel Hynes said markets took some reassurance from the Trump administration’s decision to avoid striking Iranian energy assets, reducing fears of a prolonged disruption to global crude supplies. Recent exports from Gulf producers have also helped prevent prices from returning to the extreme highs witnessed earlier during the conflict. 

EIA Reports Unexpected 3 Million Barrel Crude Build Snapping 11-Week Draw Streak 

Adding to the week’s volatile trading, the US Energy Information Administration (EIA) reported an unexpected 3 million-barrel increase in US crude inventories for the week ended 3 July, defying market expectations of a 1.4 million-barrel draw. The surprise build ended an 11-week streak of inventory declines, highlighting softer-than-expected crude demand. 

Despite the weekly increase, commercial crude inventories stood at 408.4 million barrels, around 7% below the five-year seasonal average. Gasoline inventories declined by 2.3 million barrels, while distillate stocks increased by 2.5 million barrels. The Strategic Petroleum Reserve fell to 319.5 million barrels, its lowest level since April 1983. 

US refineries operated at 96.6% capacity, processing 17.2 million barrels per day, while gasoline production averaged 10 million bpd. Crude imports declined to 5.3 million bpd, reinforcing the mixed supply picture. The inventory report tempered some of the geopolitical risk premium, although concerns over Middle East tensions continued to dominate overall market sentiment. 

IEA Warns Renewed Hostilities Could Upend 2027 Surplus Forecast 

The International Energy Agency (IEA) warned that renewed hostilities between the United States and Iran could derail its outlook for a global oil surplus in 2027, despite signs of supply recovery in June. In its July 2026 Oil Market Report, the agency said the escalation on 7–8 July had significantly increased uncertainty around the market outlook. 

Global oil supply rebounded by 4.1 million bpd in June to 98.8 million bpd after the temporary reopening of the Strait of Hormuz enabled tankers to resume exports. However, production remained 9.4 million bpd below pre-conflict levels, while Gulf oil exports climbed to 16.1 million bpd, still well below the historical average of around 24 million bpd. The IEA now expects global oil supply to decline by 3.7 million bpd in 2026, a slightly smaller contraction than previously forecast, but stressed that the outlook depends on a swift easing of geopolitical tensions. 

Brent Steadies Near $76 on Friday After Volatile Week; Both Benchmarks Set for Weekly Gains 

Oil prices stabilised towards the end of the week after reports suggested diplomatic efforts between Washington and Tehran were continuing. Brent crude traded near $76 per barrel, while WTI remained below $72, following sharp swings earlier in the week driven by military developments in the Middle East. 

Market sentiment improved after President Donald Trump said Iran had indicated its willingness to negotiate, raising hopes that fresh talks could prevent a broader conflict. Qatar and Pakistan were also reported to be facilitating diplomatic engagement, while US officials confirmed that technical discussions with Tehran were ongoing despite uncertainty over the earlier ceasefire. 

Although prices eased on Friday, both benchmarks recorded solid weekly gains. Brent ended the week around 6% higher, while WTI gained approximately 5%, reflecting the significant geopolitical risk premium that dominated trading throughout the week. 

Trump Avoids Targeting Iranian Energy Infrastructure, Easing Supply Fears 

Markets found some relief after the United States avoided targeting Iran’s oil infrastructure despite intensifying military operations. Analysts said the decision reduced fears of a prolonged supply disruption, while President Donald Trump reiterated that he did not expect a full-scale conflict. However, shipping through the Strait of Hormuz remained below normal, keeping supply concerns alive. 

Domestic Fuel Prices Remain Stable as Nayara’s July 1 Cuts Stay in Effect 

Domestic fuel prices remained unchanged despite volatile global crude markets. Nayara Energy’s earlier ₹5 per litre petrol and ₹3 per litre diesel price cuts remained in effect across its retail network, while public sector oil marketing companies kept pump prices unchanged. The stability reflected their practice of adjusting retail fuel prices based on longer-term crude price trends rather than daily market movements. 

Macroeconomic Factors: Inflation Concerns and Demand Outlook Weigh on Prices 

Macroeconomic concerns also influenced sentiment. China’s producer price inflation accelerated in June, raising concerns over weaker fuel demand, while resilient US labour market data pointed to steady economic activity. The IEA continues to expect global oil demand to contract by around 1 million bpd in 2026, with higher production from countries such as the US and Brazil likely to keep global supplies well supported if geopolitical tensions ease. 

Crude oil markets remained highly volatile as geopolitical tensions overshadowed fundamentals. Investors should closely monitor developments in the Strait of Hormuz, US inflation data, and the 2 August OPEC+ meeting for supply guidance. The course of the Middle East conflict is likely to remain the key driver of near-term oil prices. 

Source 

• https://ppac.gov.in/prices/international-prices-of-crude-oil 

• https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm