ANKARA
Oil prices slumped more than 12% last week, snapping a three-week rally, with analysts expecting them to stabilize around the $60 range in the near term if a fragile ceasefire between Israel and Iran is maintained.
Brent crude climbed to $77.81 a barrel on June 23 after US strikes targeted Iranian nuclear facilities, briefly touching a five-month peak. But prices tumbled 8.5% in a single session to $69.48 after Iran's retaliatory strike on a US base in Qatar was deemed limited in scope. It marked Brent's biggest daily loss since July 2022.
Downward pressure intensified after June 24, when reports of a ceasefire between Iran and Israel bolstered expectations of uninterrupted oil flows through the Strait of Hormuz, a chokepoint for roughly 20 million barrels of crude and petroleum products each day.
Brent crude fell 12.6% to $66.33 a barrel in the week ending June 27, marking its steepest weekly drop since March 2023.
Despite recent volatility, analysts expect prices to stabilize around the $60 range in the coming period as geopolitical risk premiums ease and fundamental supply-demand dynamics regain control.
OPEC+ decisions to shape near-term oil price trajectory
The trajectory of oil prices will hinge on signals from the upcoming meeting of OPEC+, comprising OPEC members and other non-OPEC producers, Ajay Parmar, director of Oil Markets and Energy Transition at Independent Commodity Intelligence Services (ICIS), told Anadolu.
Parmar expects prices to stabilize around current levels until there is clearer guidance from OPEC+ following their production meeting on July 6.
If OPEC+ chooses to raise supplies further, prices could fall back from current levels into the mid-$60s, he said.
Parmar noted that US President Donald Trump's pressure to push oil prices lower has had limited impact, noting that seasonal peak demand is supporting prices.
He added that the key driver remains on the supply side, where the OPEC+ alliance holds significant control.
"The main area for market participants to watch is OPEC+. Its production decisions are the most significant factor to keep an eye out for in the coming weeks," Parmar said.
Sustained low prices not viable for long-term production
Yesar Al-Maleki, a Gulf analyst at Middle East Economic Survey (MEES), noted that prices are being supported by the absence of direct attacks on vital oil infrastructure in the Israel-Iran conflict and by a persistent supply glut in the market.
"In the near term, strong summer demand, including for oil in Middle East power generation, will continue to support prices and help drawdowns in global inventories," Al-Maleki said.
Currently at $68 a barrel, the Brent price is comfortably above April and May levels before the crisis, he said, adding: "That said, from winter later this year and into Q1 next year, surpluses have been projected, which could press prices downward."
Commenting on the impact of Trump's calls for lower oil prices on US producers, Al-Maleki said that while short-term price spikes have allowed producers to lock in prices for the year, sustained low prices are not viable for long-term production.
He described OPEC+ policy as a crucial factor, likening the group to "the central bank of the oil market.
"Relatively higher seasonal demand—oil demand typically peaks in summer worldwide—is expected to support another round of accelerated production additions by key OPEC+ members in August," he added.
Al-Maleki noted that additional volumes from higher quotas may fall short, as some members have already exceeded their production limits.
He added that it remains to be seen how the group will adjust its policy for the rest of the year and into 2026.
Jorge Leon, senior vice president at Norway-based consultancy Rystad Energy, also warned that prices could decline further in the coming weeks, adding that they are trending toward the $60 level.
"The reason is that the geopolitical risk premium is evaporating, OPEC+ will likely continue increasing production and also Iran is allowed to sell crude to China freely," Leon said.
"All those elements point towards a bearish market in the weeks to come," he added.
