July saw the geopolitical risk premium return to the oil market after June’s diplomatic progress, with renewed hostilities between the United States and Iran driving a sharp recovery in crude prices. Brent began the month near four-month lows at around $71/bbl as negotiations continued and tanker traffic gradually returned to the Strait of Hormuz. However, a collapse in the ceasefire during the second week of the month reignited fears over Middle Eastern supplies, pushing Brent back above $90/bbl before prices eased into month-end as diplomatic efforts resumed.
The month opened on a relatively optimistic note. The 60-day ceasefire agreed in June remained in place, while tanker movements through the Strait of Hormuz continued to recover. Reports suggested around 10 million bpd was once again moving through the waterway, helping Brent fall below $71/bbl as traders continued to unwind the remaining geopolitical premium.
That optimism proved short-lived. On 9 July, President Trump declared the ceasefire “over”, triggering a fresh round of US air strikes against Iranian targets and renewed Iranian attacks on commercial shipping. Brent rallied more than 5% in a single session as markets rapidly priced back in the risk of widespread supply disruption. Although both sides avoided direct attacks on major production facilities, repeated strikes against shipping kept uncertainty elevated throughout the remainder of the month.
The conflict intensified further during the middle of July. Iran again declared the Strait of Hormuz closed, while the United States announced plans to reinstate its naval blockade. Attacks on UAE and Saudi-linked tankers, combined with renewed Houthi strikes on shipping in the Red Sea, raised concerns that both the Strait of Hormuz and the Bab el-Mandeb could face simultaneous disruption. At one stage, Kpler data showed only a single tanker transiting Hormuz in a day, illustrating the scale of the disruption facing global oil flows.
Fundamentals also became increasingly supportive for refined products. European inventories continued to tighten, with Amsterdam-Rotterdam-Antwerp (ARA) product stocks falling to their lowest levels in over a decade. Gasoline inventories reached five-year lows while refiners increasingly shifted yields towards diesel and jet fuel to capture exceptionally strong distillate margins. In the United States, crude inventories remained historically tight, with stocks falling for much of the month despite crude prices remaining highly volatile.
Sentiment shifted again during the final week of July after the United States paused its bombing campaign against Iran and reports emerged that Iran and Oman were negotiating terms to reopen the Strait of Hormuz. Brent fell sharply back towards the low-$80s/bbl before renewed military action around Jordan and attacks on LNG carriers reignited supply concerns, allowing prices to recover and end the month close to $88/bbl.
