HG MARKETS:

Oil prices edged higher this morning, rebounding from a two-day slide, following remarks by former U.S. President Donald Trump. He expressed his intention to keep Iranian oil flowing despite recent tensions. Trump announced a ceasefire agreement between Iran and Israel, following U.S. airstrikes on Iranian nuclear sites. In a post on Truth Social, he stated that China could continue importing Iranian oil and hoped the U.S. would also become a major supplier. However, a senior White House official later clarified that sanctions on Iran would still remain in place.

Market attention is now turning to the upcoming OPEC+ meeting, scheduled for July 6 via video conference. This meeting will be closely watched for any decision on increasing oil output in August. The price of WTI crude has climbed above $65 per barrel, while Brent crude is trading near $68. Both benchmarks had dropped by about 13% over the past two days. Meanwhile, the Brent time spread has narrowed from last Thursday’s peak of $1.77 per barrel in backwardation to around $1 per barrel, which, while lower, is still significantly higher than the average range of $0.25 to $0.50 seen earlier this year.

Though fears of a major disruption in Middle Eastern oil supplies have eased, they haven’t entirely disappeared. There remains strong demand for prompt deliveries, reflecting lingering supply risks. So far, the recent conflict has not materially impacted oil shipments from the Persian Gulf. Interestingly, Iranian oil exports have actually surged, suggesting that some trade is continuing despite geopolitical tension and ongoing sanctions.

In the U.S., oil supply data offered further support to prices. The American Petroleum Institute (API) reported a substantial drawdown in crude inventories, with stockpiles falling by 4.28 million barrels last week—well above the forecasted decrease of just 0.6 million barrels. The larger-than-expected drop suggests tighter supply conditions in the U.S. oil market.

However, refined product inventories were mixed. Gasoline stocks increased by 0.8 million barrels, hinting at possibly softer demand or improved refinery output. On the other hand, distillate inventories—which include diesel and heating oil—fell by 1.03 million barrels, suggesting continued strength in industrial and freight activity. Overall, oil markets remain sensitive to geopolitical signals and upcoming decisions from OPEC+.