Crude Oil Falls on Oversupply Fears as Iran Talks Progress

Crude oil prices declined on Monday, with WTI falling 1.3% to $68.58 a barrel and Brent dropping 1.9% to $71.57. The sell-off was driven by progress in US-Iran nuclear talks and a continued recovery in vessel traffic through the Strait of Hormuz, easing supply disruption fears.

Market sentiment is shifting from tight supplies to a potential global surplus. Brent crude remained in contango, a structure that signals oversupply. Goldman Sachs expects flows through Hormuz to normalize by the end of July and forecasts a nearly 2 million barrel-per-day surplus in 2027. Morgan Stanley has also warned of a looming glut and cut its price forecasts.

On the supply side, Iran has exported more than 40 million barrels since receiving US sanctions relief, while Russian oil exports surged to record levels. Despite improving flows, vessel traffic through Hormuz remains below pre-war levels, with geopolitical risks still present.