Oil prices ended the second quarter sharply lower, recording their largest quarterly declines since the early stages of the COVID-19 pandemic, as improving shipping activity through the Strait of Hormuz eased fears of prolonged supply disruptions following months of heightened geopolitical tensions.

West Texas Intermediate (WTI) crude settled at $69.50 per barrel, finishing the quarter approximately 31% below its end-of-March level, marking its steepest quarterly decline since the first quarter of 2020.

International benchmark Brent crude also closed lower, with the August contract settling at $72.92 per barrel, reflecting a quarterly loss of roughly 38%.

Strait of Hormuz Reopens, Easing Supply Concerns

Energy markets have become increasingly optimistic as commercial shipping activity through the Strait of Hormuz continues to normalize despite intermittent military incidents and ongoing disagreements between the United States and Iran over navigation through the strategically important waterway.

One of the most significant developments has been the return of supertankers entering the Persian Gulf, rather than vessels simply attempting to exit the region after earlier disruptions.

The recovery in inbound traffic suggests producers are once again moving crude into global export channels, helping stabilize supply expectations.

In addition, Saudi Arabia has continued routing significant oil exports through the Red Sea, further supporting global supply availability.

Market Focus Shifts Toward Diplomacy

Oil prices also gave back earlier gains during the trading session as investors closely monitored diplomatic negotiations between U.S. and Iranian officials in Qatar.

The talks have redirected market attention away from immediate military risks toward the possibility of a longer-term political resolution that would reduce the likelihood of major disruptions to global energy supplies.

Analysts noted that investors increasingly believe any future attempts to interfere with shipping through the Strait of Hormuz would likely be met with a rapid international response, reducing the probability of prolonged supply interruptions.

Hidden Oil Flows Add Market Uncertainty

Despite improving visibility, some uncertainty remains regarding actual oil volumes moving through the region.

Industry observers note that a number of commercial vessels continue to disable their tracking systems while transiting sensitive areas, making it difficult to accurately measure total crude shipments.

This creates uncertainty over how much oil is actually reaching international markets, although many analysts believe overall exports may be stronger than publicly available shipping data suggests.

Global Supply Outlook Improves

The combination of recovering Gulf exports, strong U.S. crude production, resilient Saudi shipments, and relatively weaker Chinese import demand has contributed to a more balanced global oil market.

As supply concerns have eased, traders have steadily reduced the geopolitical risk premium that had pushed prices sharply higher earlier in the year.

While geopolitical tensions remain elevated, current market pricing suggests investors expect oil supplies to remain sufficient unless a significant escalation disrupts production or shipping infrastructure.

Looking Ahead

Oil markets will continue monitoring negotiations between the United States and Iran, tanker movements through the Strait of Hormuz, OPEC+ production decisions, and global demand trends during the second half of 2026. Although prices have retreated sharply from recent highs, geopolitical risks remain elevated, meaning any renewed disruption to Gulf shipping or unexpected supply outages could quickly restore volatility to energy markets.