Global oil prices extended their decline on July 2, 2026, as easing geopolitical tensions in the Middle East and the gradual reopening of shipping through the Strait of Hormuz continued to ease concerns over supply disruptions. West Texas Intermediate (WTI) crude fell 58 cents, or 0.85%, to $68.00 per barrel, according to OilPrice.com.
Murban crude, the benchmark for Middle Eastern exports, posted the steepest decline, tumbling $3.37, or 4.88%, to $65.64 per barrel. Brent crude, the international benchmark, dropped $1.78, or 2.45%, to $71.16 per barrel as reported by Gulf News citing Trading Economics.
The selloff comes after oil prices surged during the recent US-Iran conflict, when fears that Iran could block the Strait of Hormuz triggered a geopolitical risk premium across energy markets. The strait is a vital shipping lane that carries roughly one-fifth of the world’s oil supply. That premium has since largely eased following the June 17 US-Iran Memorandum of Understanding, which committed both sides to restoring commercial shipping through the Strait of Hormuz as part of broader ceasefire and de-escalation efforts.
Shipping traffic through the waterway has begun to recover, although vessel movements remain well below pre-conflict levels. Analysts say the decline also reflects growing expectations that physical oil supplies will remain largely uninterrupted, while major producers continue pumping at elevated levels. The sharp fall in Murban crude, widely used as a pricing benchmark for Asian refiners, signals improving confidence that Gulf-based exports will continue flowing despite lingering regional tensions.
Goldman Sachs warned that despite the coming global race to rebuild depleted oil inventories, a massive glut could hit the market next year. Samantha Dart, co-head of global commodities research at Goldman, told Bloomberg Television that the bank expects a global oil surplus of about 3 million barrels per day in 2027. Even with over 1 million barrels per day of SPR rebuilding globally, that would still leave close to 2 million barrels per day of surplus.
Morgan Stanley has also cut its oil price forecasts for the next 18 months, as reported by OilPrice.com, expecting the reopening of the Strait of Hormuz to accelerate a new supply glut. Investors are now shifting focus from geopolitical risk to underlying market fundamentals, including global demand, inventories, OPEC+ production policy and US output levels.
For the UAE and broader Gulf region, the normalisation of Hormuz traffic carries significant economic implications. The recovery in shipping flows supports the UAE’s position as a logistics and energy export hub, while lower oil prices could reduce government hydrocarbon revenues, even as non-oil sectors continue to show growth.
If shipping through the Strait of Hormuz continues to normalise, traders say crude prices could remain under pressure unless a fresh supply disruption or stronger-than-expected global demand emerges.
