Crude Oil Has Nearly Erased Its War Gains But A Weekend Tanker Strike Pushed It Higher Monday

Crude oil has nearly erased all of its war-related gains. Brent crude was trading around $72 per barrel Monday and WTI was near $70, levels not seen since before the US-Iran war began on February 28.

At the conflict's peak in April, Brent had surged above $108.

The peace deal announced June 14 and the gradual reopening of the Strait of Hormuz sent prices tumbling more than 10 percent last week alone.

Monday brought a partial rebound. Over the weekend, a supertanker carrying two million barrels of Qatari crude was struck near the Strait of Hormuz, the latest in a series of tit-for-tat exchanges between the US and Iran that exposed just how fragile the interim peace agreement remains.

The US and Iran agreed to halt direct attacks ahead of fresh diplomatic talks scheduled for Tuesday in Doha, but the weekend's events were enough to push Brent up roughly 0.7 percent and WTI up 1.2 percent as traders rebuilt a geopolitical risk premium into prices.

The overall trend is still downward. Saudi Aramco has resumed crude loadings at its Ras Tanura export terminal after a nearly four-month suspension.

Shipping activity through the Strait has increased significantly from its wartime lows.

But analysts caution that a full return to pre-war supply levels is months away, mines still need to be cleared from shipping lanes, tanker backlogs remain severe, and hundreds of vessels are still stranded in the Persian Gulf.

The IEA estimates global supply is running nearly four million barrels per day below pre-conflict levels.

For American consumers, the direction is encouraging. Gasoline prices, which the May CPI showed running 40.5 percent above year-ago levels, should continue falling as Hormuz normalizes.

How quickly depends entirely on whether Tuesday's Doha talks hold.