Brent Crude Sheds 10 Percent as Hormuz War Premium Evaporates, WTI Falls to $69

Brent crude fell 10 percent this week, reaching $71.95 per barrel on Friday morning and erasing the risk premium built since a US military strike targeted Iranian infrastructure on February 28, 2026. WTI dropped 3.77 percent to $69.21 per barrel as of late morning Friday on the CME, per OilPrice.com. Both benchmarks are on pace for their sharpest weekly decline since the conflict began.

What the Market Built In After February 28

The February 28 US attack on Iran triggered an immediate spike in global crude prices as traders priced in supply disruption risk through the Strait of Hormuz. The strait handles roughly 20 percent of global oil supply; even partial closures remove millions of barrels per day from accessible markets. Prices climbed for weeks after the attack as tanker owners rerouted cargo around the Cape of Good Hope, paying longer voyage times and higher insurance premiums. This week's decline reflects markets unwinding that premium as physical flows recover.

Hormuz Shipping Rises to Post-Conflict High

Tanker transits through the Strait of Hormuz climbed to the highest weekly tally since the onset of the US-Iran conflict. More than 16 million barrels of crude and products cleared the chokepoint on Wednesday and Thursday alone, per OilPrice.com. Normal daily transit counts run between 130 and 140 tankers; current volumes remain below that baseline but the trajectory has improved. Saudi Aramco loaded its first Persian Gulf crude cargo since March, signaling confidence that the strait is viable for commercial export traffic. Qatar announced plans to restore full LNG operations at its Ras Laffan facility within weeks.

Iran Drone Strike Shows Risk Has Not Cleared

The recovery remains contested. Iran fired drones at a Taiwan-owned cargo vessel attempting an unauthorized transit route through the strait, damaging the ship's bridge approximately seven miles off Oman's coast. No formal ceasefire or diplomatic agreement has been reached between the US and Iran. Markets appear to be pricing out conflict risk ahead of any political resolution, a dynamic that could reverse sharply if hostilities escalate.

China's Import Slowdown Adds a Demand Headwind

China's crude imports are on track to reach their lowest monthly level since 2016, per OilPrice.com, removing a demand cushion that had partially offset supply disruptions through much of the conflict period. Chinese state refiners are also considering resuming Iranian oil purchases for the first time since 2019; if that switch materializes, it will redirect Gulf barrels back into the spot market. West African crude differentials collapsed to record lows this week as refiners that bought non-Gulf barrels during the conflict reversed those trades. Middle Eastern crude benchmarks Dubai and Murban flipped into contango, signaling near-term oversupply expectations in Asian markets.

Saudi Aramco OSP Cuts and Iraq OPEC Exit Threat Signal More Supply

Saudi Arabia is expected to reduce its official selling prices for August-loading crude, per OilPrice.com. Saudi Aramco functions as the commercial arm of the Saudi state; OSP reductions are the market's clearest forward signal from Riyadh about near-term supply intentions. Iraq has also floated the idea of exiting OPEC to pump more oil independently, per OilPrice.com, adding uncertainty to OPEC+ output discipline. Together, lower Saudi OSPs and Iraq's output ambitions point to structural pressure on OPEC+ cohesion heading into the second half of 2026.

WCS-WTI Spread Narrows to $9.64, Far Below Historical Norms

Western Canadian Select was quoted at $59.57 per barrel as of June 25, per OilPrice.com, with an 11-hour reporting delay; at Friday's WTI intraday price of $69.21, that translates to a WCS-WTI differential of approximately $9.64 per barrel. That spread is far below the 2022-2023 average of roughly $15 to $20 per barrel, a structural shift driven by the Trans Mountain Expansion (TMX) pipeline opening Pacific coast markets to Alberta heavy crude producers in 2024. TMX broke the near-exclusive US Gulf Coast routing that had historically kept the WCS discount wide. Canadian producers with TMX access are partially insulated from the domestic heavy crude pricing pressure that drove those historical differentials.