SINGAPORE, July 2 (Reuters) – Oil prices dropped about 1% on Thursday, down for a third consecutive day, after Qatar said Iran and the U.S. had made progress in indirect talks focused on the Strait of Hormuz, which handled one-fifth of global oil supply before the war.
The talks made “positive progress” on matters related to the memorandum that halted the war in June, a Qatar Foreign Ministry spokesperson said in a post on X, though there was no sign the two sides made headway towards a lasting peace.
Brent futures lost 79 cents or 1.1% to $70.78 a barrel by 0642 GMT, while U.S. West Texas Intermediate crude fell 84 cents or 1.2% to $67.74 a barrel. Both benchmarks fell more than 1% in the previous session.
As the strait stays open and crude oil flows out, there are growing expectations of oversupply and competition for market share is pushing prices down, Haitong Futures said in a note.
OPEC+ oil-producing countries are likely to agree to a further hike in their output targets from August when they meet on Sunday, sources said on Wednesday.
UBS cut on Thursday its Brent forecasts citing the U.S.-Iran pact and the subsequent increase in oil shipping through the Strait of Hormuz.
It cut its average Brent price forecast for the September quarter by $25 and for the December quarter by $10. The bank now expects the benchmark to average $80 a barrel during the second half of the year and $75 in 2027.
“Despite this, we believe it is premature to assume a full normalisation, and see price risk skewed to the upside, noting that inbound tankers to the Persian Gulf have lagged outbound tankers,” UBS said.
The next meeting between Iran and U.S. negotiators will take place after July 9 funeral processions for Iran’s late Supreme Leader Ayatollah Ali Khamenei, the Qatar ministry added.
(Reporting by Sam Li and Lewis Jackson in Beijing, Sudarshan Varadhan in Singapore; Editing by Sonali Paul and Edwina Gibbs)
