OPEC output surges as Strait of Hormuz reopens; Iran warns ships on route rules

Strait reopens after four-month freeze

Saudi Aramco has resumed loading at Ras Tanura, and the first five supertankers carrying a combined 10 million barrels of Saudi crude exited the Strait of Hormuz, according to Reuters. The strait was effectively closed for almost four months due to the US-Iran conflict. Between 30 June and 1 July, maritime data captured 24 inbound and 17 outbound ships, with inbound traffic dominated by Iran-linked vessels.

Any ignoring of the command, deviation from the designated route, or disregard for the navigation protocols of the Islamic Republic of Iran in the Strait of Hormuz will be met with an immediate and decisive reaction by the armed forces, endangering the safety of vessels violating the ban.

Roughly 450 vessels are still waiting to exit the Persian Gulf, held back by insurance terms. War-risk premiums that used to cost about 0.25% of a vessel's value per voyage have surged to as much as 3% in high-risk zones. For a tanker worth $100 million, that means a single transit can cost around $1 million compared to $200,000 before the conflict.

Prices drift lower then edge up

Brent crude fell from roughly $120 a barrel in March to about $72 after the peace deal unlocked supply. On Friday, West Texas Intermediate for August delivery was at $69.06, up 0.54%, and Brent for September at $72.28, up 0.67%. The modest gains followed Thursday's Iranian military warning and a US CENTCOM statement underscoring a joint commitment to the free flow of goods through the strait.

Oil market fundamentals are improving quickly as disruptions tied to Strait of Hormuz transport fade and flows normalise.

Citi added that the US-Iran peace process remains “fragile,” and Tehran has not dropped its claim to control the waterway. Weaker-than-expected US employment data also capped expectations of further Federal Reserve rate hikes, offering some support to crude.

OPEC production bounces, still far below pre-war

June OPEC output reached 18.75 million barrels per day, driven by large gains from Kuwait, Saudi Arabia, and Iran. The biggest jump came from Kuwait, which added 870,000 b/d to 1.36 million b/d, though its production was still about 80% below pre-conflict levels. Saudi Arabia lifted output by 550,000 b/d to 7.2 million b/d, with exports already at around 90% of typical volumes. Iran raised output by 510,000 b/d to 2.85 million b/d and continues to store crude on tankers amid difficulty finding buyers.

Despite the rebound, OPEC production remains 7.3 million b/d, or 28%, below the level recorded in February. Outside the cartel, Russia increased oil deliveries to record highs.

Geopolitical edges remain sharp

Iran has already attacked a cargo vessel that used a non-preferred route since the ceasefire, triggering the first exchange of blows between US and Iranian forces after the truce. President Donald Trump told CNBC that Iran had agreed to “practically everything” the US demands, while describing the country as militarily destroyed and not a full-scale war. He did not answer directly whether he would resume conflict absent a deal.

We are negotiating and we will see if we can do it. I think they agreed to practically everything we need.

He compared Iran’s behavior to that of a “spoiled child” who needs time to adjust to stricter treatment.

OPEC+ decision due on Sunday

Ministers from OPEC+, which includes Russia, will hold a video conference on 5 July to set production quotas for the coming month. Sources told Bloomberg that the most likely outcome is another modest increase of 188,000 barrels per day for August. That would mark the fourth consecutive monthly hike and the penultimate step in unwinding the deeper cuts imposed during the disruption.

The additional supply is arriving at a time of moderate demand, especially in China, and analysts note that some pockets of oversupply are already capping the price recovery that followed the blockade.