Brent Edges to $72 as Saudi Tankers Exit Hormuz, Demand Recovery Lags
Pre-holiday short-covering lifted crude marginally Thursday, but weekly losses and softening demand signal the market has shifted from supply-shock pricing to supply-return arithmetic.
ICE Brent crude front-month settled at $71.80 a barrel on Thursday (2026-07-02), up 23 cents or 0.32%, as buyers sought coverage ahead of the US Independence Day weekend. WTI crude front-month closed at $68.69, up 11 cents. Despite those modest gains, both contracts ended the week in the red: ICE Brent crude front-month fell 0.60% over the five sessions, WTI crude front-month dropped 0.78%.3
"The focus has shifted to how much supply are we going to see in the markets from how much supply are we going to lose," said John Kilduff, partner at Again Capital. That observation captures the market's current position. After weeks when the risk calculation was dominated by what the Hormuz closure might permanently remove from global supply, the tape is now working through what a partial normalisation of those flows means for price.3
The scale of the original disruption gives the current repricing its magnitude. When the US-Israel campaign against Iran began roughly ten weeks ago, the Strait of Hormuz was largely closed, threatening to remove nearly 14 million barrels per day from global output, around 14% of total supply. ICE Brent crude front-month peaked above $112 in the week of May 18 (2026-05-18) as hopes for a swift diplomatic resolution faded and the physical loss mounted.2,1
The flow is now partially reversing. At least five supertankers carrying a total of 10 million barrels of Saudi crude loaded at Ras Tanura have cleared the strait, according to Reuters. UBS cut its ICE Brent crude front-month price forecasts in response, citing the increase in oil shipping through Hormuz, through which 20% of the world's oil is carried by tanker. ICE Brent crude front-month was trading near $72.16 in early Asian hours on Friday (2026-07-03), a long way from those May highs.3
Analysts at HSBC expect the market "to absorb returning Middle East barrels through gradual restocking, alongside the end of IEA strategic stock releases in July." The sequencing matters. Physical supply normalising at exactly the moment that emergency buffer releases wind down is not a clean positive for price. The transition from crisis-mode inventory drawdown to routine commercial restocking carries its own adjustment dynamics.3
Demand presents a separate headwind. "Crude oil buying from China and oil demand has not really properly revived yet," said Bjarne Schieldrop, chief commodities analyst at SEB. China's Unipec had earlier been reported to resume purchases after a period of caution, but the aggregate demand signal from the world's largest crude importer remains soft heading into the second half.3
The strategic reserve releases that helped stabilise markets during the closure cannot run indefinitely. IEA Executive Director Fatih Birol confirmed earlier that releases were adding 2.5 million barrels per day to the market, but emphasised they were "not endless." When those releases stop in July, confirmed returning Gulf volumes will need to carry the full weight of the supply balance without the buffer.1
The alternatives that filled supply gaps during the crisis were useful but limited. Venezuela and Norway each added 200,000 b/d; Brazil contributed 100,000 b/d. The refined-products side was hit hardest, with the loss of 4.4 million b/d of Gulf-sourced products pushing diesel, gasoline and jet-fuel prices up between 60 and 120 percent at the peak. The products complex remains only partially normalised.2
Thursday (2026-07-02)'s thin, pre-holiday move will tell traders little about the weeks ahead. Once US markets fully reopen, the market returns to harder questions: how quickly the remaining Saudi tanker flow resumes, whether Chinese crude demand accelerates into the second half, and whether the five supertankers that have already cleared the strait represent the start of a sustained reopening or an early trickle. The Schieldrop warning about demand may be the factor the market has underweighted. Even with physical supply recovering, a slow demand revival means the $40-per-barrel collapse from May's peak is not necessarily over.3