The round trip is complete. WTI dipped below $70 on Wednesday, touching its lowest level since late February, which is to say its lowest since the Strait of Hormuz closed and this whole crisis began. Brent traded in the mid-$70s. The premium that took four months to build is gone, and oil now sits roughly where it was the day before the first tanker was turned back. The war added about $40 a barrel at its peak. The market has handed all of it back.
The clearest proof of how complete the unwind is came from the one report that should have pushed the other way. On Wednesday the EIA said US crude stocks fell by about 6 million barrels last week, a bigger draw than the roughly 4.5 million the market expected. A draw that size is normally good for a dollar or more to the upside. Oil fell to a fresh four-month low on the same session. When a bullish number cannot lift the price, the market is telling you it is trading something else entirely.
The Draw the Market Ignored
What it is trading is the return of supply, and the inventory report had something for that side too. Underneath the headline crude draw, gasoline stocks rose by about 2 million barrels and distillate by about 3 million, both builds where the market expected draws. Product builds in the middle of what should be peak summer driving season point to soft demand, not tight supply.
But the inventory data was a footnote. The dominant force is the Strait of Hormuz reopening and the wave of barrels it is releasing. Tanker traffic through the strait has normalized to the point that ships are sailing with their tracking signals on again, a small signal of large confidence. Middle Eastern and West African producers are flooding the market with cargoes that were stranded or withheld during the crisis. A US weekly draw of 6 million barrels is a rounding error against that flow. The market looked at the report, saw the bigger picture behind it, and sold.
The Banks Race Lower
Wall Street is repricing to catch up. Morgan Stanley, in a note pointedly titled "Is Peace Mispriced?", cut its Brent forecast to $90 for the third quarter and $80 for the fourth, down from $100 and $95. Goldman Sachs cut its fourth-quarter Brent call to $80 and its 2027 average to $75. The common theme is oversupply, with high US exports and weak Chinese imports described as the twin forces capping any rebound.
These are not crisis forecasts. They are post-crisis forecasts, and they describe a market that has stopped worrying about a supply shock and started worrying about a glut. The direction of the revisions, all lower, all within days of each other, tells you the analyst community now sees the same thing the price action does: the binding constraint on oil is no longer how much is at risk, but how much is coming back.
The Disputes That No Longer Move the Price
The politics, meanwhile, are genuinely unresolved, and the market genuinely does not care. The fight over IAEA inspections hardened this week rather than healing. Agency chief Rafael Grossi went on record on Wednesday insisting inspections of Iran's enrichment sites are "going to happen," pointing to the framework text. Iran's deputy foreign minister Kazem Gharibabadi answered that the question would be decided "only within the framework of a final agreement and as a result of practical action by the other side to end all sanctions." That is a hardening, not a compromise. Iran is now tying inspections to full sanctions removal first, and to the final deal rather than the interim window. The inspectors Vance said would arrive "this week" have not arrived.
Lebanon stayed on the same knife edge. A fresh Israeli drone strike on Wednesday killed two people near Kfar Reman in the Nabatieh district, striking even as US-mediated Israel-Lebanon talks continued in Washington. Those talks remain deadlocked on the same point as before: Israel wants proof Hezbollah is disarming before it withdraws, and Lebanon wants withdrawal first. The ceasefire is holding in name and bleeding in fact.
Either of these could still break the deal inside its 60-day window, and that is the one thing keeping a floor under the market. The mines are still in the water, full normal throughput is still weeks to months away, and a genuine collapse would rebuild a premium fast because the market is carrying exactly none. OPEC+ meets on July 5, with a small July output increase already agreed and the open question being whether a glut and four-month-low prices push the group to pause.
For now the verdict is unambiguous. Oil has round-tripped the entire war, a bullish inventory draw could not dent it, and the people paid to forecast prices are chasing the move down. The barrels are back, and the price is back with them.
This article is for informational purposes only and does not constitute financial or investment advice. Oil market conditions can change rapidly. Consult a qualified financial professional before making investment decisions.