July Crude Oil Higher With Peace Talks in Limbo

CRUDE OIL

July Crude Oil was higher early Monday after strikes by Iran and US over the weekend appeared to put the chances for a reopening of the Strait of Hormuz further off into the future. US said it conducted “self-defense strikes,”  and Iran was reportedly dropping more mines into the Strait of Hormuz last week. Iran’s Revolutionary Guard said it targeted an air base used for US attacks. Adding to the concerns was news that Israel ordered troops to move further into Lebanon, even after Israel-Lebanon peace talks in Washington on Friday. Trump said on Friday he would soon decide on a proposed deal to extend the cease fire, but even if it is extended, the reopening of the strait is the key concern, and once it opens, it will take a long time to get the flows back to normal. Saudi Arabia expected to cut is official selling prices of crude to Asia. The EIA revised its 2026 US crude production forecast in May to 13.65 million bpd from 13.51 million bpd projected in April. Reuters reports that US shale producers have the lowest stock of drilled-but-uncompleted wells (DUCs) on record, limiting their ability to move quickly to boost crude output and replace rapidly depleted oil inventories.

PRODUCTS

Product prices moved higher overnight in line with crude oil but they held inside last week’s ranges. Gasoline stocks remain at the lowest they have been for this point in the season in at least six years, and distillate stocks are the lowest they have been in at least six years, period. Reuters reported that Russian diesel production fell around 10% in May, following a 10% drop in April, as Ukrainian drone attacks on refineries forced them to reduce or halt output.

NATURAL GAS

July Natural Gas turned lower Monday after reaching its highest level since March 27 earlier in the session, with traders clearly disappointed that the market failed to close a gap at 3.409. EIA reported US gross natural gas production rose to 135.52 billion cubic feet per day in March, up from 134.63 bcfd in February but still down from a record 136.01 bcfd in December. News on Sunday that Iran has restored gas production at three offshore platforms in the South Pars gas field that had been forced to halt output after Israeli attacks disrupted processing capacity at some onshore facilities, may have also pressured the market. The 6-10 and especially the 8-14-day US forecast show above normal temperatures covering most of the lower 48 states, which could provide a boost to air conditioning usage.

Interested in more futures markets?  Explore our Market Dashboards here.