Oil Returns to Prewar Levels as Gulf Flows Surge — But the Floor May Not Hold

Doha, June 25 (EBM Newsdesk Analysis) — Brent crude has fallen below its level on the eve of the Iran war for the first time since the conflict began, as a wave of pent-up Gulf oil finally reaches the market — but analysts warn the current price reflects a temporary oversupply rather than a genuine return to normality. Brent crude dipped 1.8% to $72.40 a barrel on Thursday, dropping below its pre-war closing price of $72.48 for the first time since the war between the US, Israel and Iran began in late February. US West Texas Intermediate fell over 1% to $69.36. The moves mark the clearest sign yet that the supply shock which sent Brent as high as $126 a barrel in March has substantially unwound — but several analysts caution that the market is now oversupplied in the short term rather than genuinely stable.

A Tanker Surge Out of the Gulf

The price move tracks a sharp increase in tanker traffic exiting the Strait of Hormuz. On Wednesday, 31 tankers left the Gulf — a near 50% increase on the previous day, according to ship-tracking data from Windward. US energy secretary Chris Wright said 20 million barrels of crude exited the strait in the preceding 24 hours alone, just under a fifth of global daily consumption, aboard 72 ships. The surge follows the framework agreement between the US and Iran to reopen Hormuz and the US’s decision to lift sanctions on Iranian oil for a 60-day window.

More Than a Billion Barrels Were Trapped

The scale of what’s now being released is considerable. The conflict trapped more than a billion barrels of oil inside the Gulf, forcing producers to halt output and countries to draw down strategic reserves instead — a dynamic EBM tracked closely as the UK and other importers faced acute fuel supply pressure earlier in the crisis. Saudi Arabia’s emergency pipeline infrastructure, including the converted Petroline system, played a critical role in keeping some exports flowing even while Hormuz itself remained effectively closed — though that bypass capacity never came close to replacing the full 20 million barrels a day that normally transits the strait.

Traders Pricing in Normality — Prematurely, Some Argue

Francis Osborne, head of oil analysis at Argus Media, said traders are “pricing in a return to normality” but “are not taking into account the risks further down the road, which still remain very real.” That caution echoes warnings EBM flagged when Iran’s missile strikes briefly shattered an earlier ceasefire, underscoring how quickly sentiment in this market has swung between relief and renewed alarm over the course of the conflict.

A Higher Floor Is Coming, Analysts Say

Amrita Sen, founder of Energy Aspects, said some trading houses are beginning to unwind their short positions and that she expects a new floor for crude prices to form between $80 and $90 a barrel within about a month, once the oil currently trapped on tankers inside the Gulf has fully moved. Paul Horsnell, chairman of the Oxford Institute for Energy Studies, argued the current surge in Gulf flows is unsustainable, since production will take time to catch up with demand as ships reroute and idled oilfields restart.

Iran’s Navy Still Asserts Control

Underscoring that the situation remains unresolved, Iran’s Revolutionary Guards navy said on Thursday that coordination with the force is “mandatory” for vessels transiting the strait, warning ships against unauthorised routes — a reminder that the yuan-denominated access conditions Tehran has floated previously reflect an intent to retain long-term leverage over the waterway, not simply a wartime negotiating position that disappears once shipping resumes.

The EBM Take

The gap between today’s headline price and the underlying physical reality is the real story here. A 1.8% daily move back below pre-war levels looks like resolution, but it is better read as a release valve opening after months of pressure — not evidence the structural risk has gone away. Markets have repeatedly compressed weeks of risk premium into single-day moves throughout this conflict, only to see sentiment reverse sharply when diplomacy faltered. With Iran’s navy still asserting authority over transit terms and Tehran’s currency conditions for Hormuz access unresolved, the prudent read is that today’s price reflects an oversupply correction, not a durable peace dividend. Businesses and investors treating $72 oil as the new normal should note that two of the analysts closest to physical flows — Sen and Horsnell — are both signalling a higher floor is coming within weeks, not months.

Related reads:

• Could War in Iran Trigger a Global Recession? The $100 Oil Scenario Explained
• Iran and US Agree Deal to Reopen Strait of Hormuz
• The Saudi Petroline Became Critical to the Global Oil Crisis

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