Brent Rises Above 72 Dollars: Market Shifts Focus from Middle East to Supply and Demand

The per-barrel price of Brent crude oil rose to 72,29 dollars on Tuesday, registering a limited increase. The US West Texas Intermediate (WTI) crude oil also reached 68,84 dollars, exhibiting a similar upward movement. Both crude oil types have settled at a balance close to the levels seen before the onset of the Israel-Iran conflict. Market analysts state that the geopolitical risk premium has partially decreased, but traders do not immediately trust long-term stability. This gradual rise in Brent and WTI prices points to a period where global supply and demand dynamics are becoming increasingly evident.

Tim Waterer, Chief Market Analyst at KCM Trade, stated that the resumption of supplies directly reduced the geopolitical risk premium. However, he emphasized that due to the unpredictable nature of relations between the US and Iran, market participants are being cautious about the current ceasefire being long-lasting. On Monday, US President Donald Trump brought the possibility of military intervention back to the agenda by stating that their country would either make an agreement with Iran or see it through to the end. These statements show that uncertainties in international energy markets have not completely ended. Investors continue to closely monitor the diplomatic traffic and negotiations between these two countries.

The international public and energy investors are focused on the security of trade routes that affect the exports of Basra Körfezi countries. The most critical point of this is the negotiations between the US and Iran regarding maritime security in the Hürmüz Boğazı, where a significant portion of world oil trade takes place. At the same time, the speed at which Gulf countries return to their pre-conflict production levels is being closely examined. In parallel, according to Reuters analysis, it was determined that Birleşik Arap Emirlikleri raised its daily oil production above 3,8 million barrels in Haziran. This figure means the highest level seen since Nisan 2020 and is considered a result of the country earning the right to increase its production within the scope of the OPEC+ agreement.

In addition to these significant increases on the supply side, it was learned that OPEC and its allies such as Russia decided to increase their daily target production amount by 188 thousand barrels starting from Ağustos. This decision stands out as a consecutive production upgrade step following the quota increases in Haziran and Temmuz. On the other hand, Saudi Arabistan's national oil company Saudi Aramco lowered the official selling price of Arab Light, its main crude oil type to be delivered to the Asian market in Ağustos. The reduction of the said price to 1,50 dollars above the average Oman/Dubai quotations reflects the effects of competition and supply abundance in the region.

In light of all these developments, analysts state that positive news on the supply side has largely been priced in by the market. Therefore, it is predicted that the most important factor determining the future course of oil prices will be realistic data from the global demand side, especially from Çin. The confirmation of positive developments featured in the headlines also in the physical market is of critical importance for prices to move further upwards. In an alternative scenario, if the increase in supply occurs faster than demand recovery, a downward pressure on prices is likely to form. Global economic growth expectations and energy demands of major consumer countries will be among the most closely monitored indicators of the upcoming period.