Crude oil prices extended their decline on Wednesday, hovering near four-month lows, as oil shipments through the Strait of Hormuz — a crucial route for global energy trade — normalised and signs emerged that more stranded tankers would resume operations amid progress in US-Iran peace talks.
Brent crude futures dropped 1.18% to $76.17 a barrel, while US West Texas Intermediate slipped 1.16% to $72.36. Both benchmarks settled around 1% down on Tuesday, touching their lowest since early March.
Crude oil prices have retreated more than 36% from the nearly $ 120-per-barrel highs reached during the peak of the recent US-Iran war in the Middle East earlier this year.
The market has also come under pressure after Washington granted Tehran a 60-day sanctions waiver following the initial round of peace talks, allowing Iran to resume oil exports. Easing hostilities in Lebanon has further reduced concerns over supply disruptions.
“Crude oil prices have retreated sharply as concerns over supply disruptions in the Middle East ease following an interim US-Iran peace deal and the normalisation of tanker movements through the Strait of Hormuz. The reopening of trade flows has significantly reduced the geopolitical risk premium that had pushed oil prices higher in April and May,” said Jigar Trivedi, Senior Research Analyst at IndusInd Securities.
According to Trivedi, additional Iranian crude returning to global markets, coupled with rising output from OPEC+ producers, is expected to improve supply availability in the coming months.
Investors are now closely monitoring the pace at which Middle Eastern producers restore exports and whether tanker traffic through the region and the Strait of Hormuz continues to increase.
Can crude oil prices drop below $50?
While easing supply concerns are likely to keep pressure on crude oil prices, analysts believe a decline below $50 per barrel remains unlikely in the near term.
“A sustained fall below $50 per barrel remains unlikely in the near term. While the easing of tensions removes a key bullish factor, global oil demand continues to grow, particularly in emerging Asian economies. Moreover, major producers are likely to intervene through production cuts if prices decline sharply, limiting downside risks,” said Trivedi.
He expects Brent crude to trade in the $65–$75 per barrel range as markets shift focus back to supply-demand fundamentals. According to him, a drop below $50 would require a combination of significantly higher Iranian exports, continued production increases from major producers, weaker demand growth in China and other major economies, and a substantial build-up in global inventories.
“For now, the market appears to be shifting from a geopolitical-driven rally to a fundamentals-driven phase, with oversupply risks rising but not yet sufficient to trigger a collapse toward $50 oil,” said Trivedi.
Ajay Kedia, Director at Kedia Advisory, also does not foresee crude oil prices falling below $50, despite the prospect of higher supply following the easing of geopolitical tensions.
“Crude oil prices are likely to remain in the $70–$85 per barrel range during July and August. We may see an oversupply situation emerge in the fourth quarter of calendar year 2026, which could push prices lower. However, oil prices are likely to find support around $62–$65 per barrel, and I do not see any signs of prices falling below the $60 level,” Kedia said.
With geopolitical tensions easing and supply concerns receding, oil markets are increasingly returning to a fundamentals-driven environment. While additional Iranian exports and higher OPEC+ production could keep prices under pressure, analysts believe strong global demand and potential production cuts by major producers should prevent a deeper slide.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
