Oil prices have returned to pre-war levels for the first time since the US-Israel conflict with Iran began on February 28, 2026. WTI crude is trading at $68.43/bbl on July 3, down 26% in the past month as the war premium fully unwinds. Brent crude is at $71/bbl, recovering from the April peak of $120/bbl when the Strait of Hormuz was effectively closed.
The Strait of Hormuz reopening is the dominant driver. After the conflict effectively shut the waterway in March — described by the IEA as the "largest supply disruption in the history of the global oil market" — a mid-June framework deal and subsequent agreements have gradually restored flows. Maritime intelligence firm Kpler reports 284 vessels have made the transit since June 18, up from near-zero levels during the peak conflict, though still below the pre-war average of 125-140 vessels/day.
OPEC+ has responded with four consecutive monthly quota increases. Seven core members raised quotas by 206 kb/d in both April and May, 188 kb/d in June, and another 188 kb/d for July. Cumulative increases total nearly 800 kb/d. However, actual production remains far below targets due to the Gulf export disruption — OPEC+ averaged only ~33.2 mb/d in April compared to 42.8 mb/d in February. Saudi Arabia's quota rose to 10.291 mb/d in June, far above its actual production.
The UAE's departure from OPEC effective May 1 adds a new dimension. The UAE, now free to set its own production policy, has restored exports to more than 3.9 mb/d as Hormuz reopens. This competitive overhang risks keeping prices capped even as demand recovers. Saudi Arabia and the UAE have restored oil exports to Asia, bringing total daily flows through the Strait above 10 million barrels.
US natural gas (Henry Hub) is trading at $3.18/MMBtu, down 7.8% year-over-year. The EIA's June STEO expects Henry Hub to average about $3.34/MMBtu in H2 2026. Production in the Lower 48 states rose to an average of 110.0 bcf/d in June, up from 109.7 bcf/d in May. National inventories are anticipated to rise to 5.9% above normal levels. Meteorologists predict above-normal heat through mid-July, with gas-fired plants providing roughly 40% of US electricity expected to burn significantly more fuel.
European TTF natural gas is trading at €43/MWh, down from war-driven peaks. Storage facilities are currently around 48% full, well below the 56% level recorded at the same period last year and the five-year average of 61%. An intense heatwave across Europe is boosting demand from electricity providers. The region continues to struggle to rebuild inventories to historical norms following supply disruptions.
Asian LNG (JKM) trades at $16.03/MMBtu, maintaining a wide premium over Henry Hub ($2.81) and TTF in energy-equivalent terms. The $13+/MMBtu JKM-HH spread continues to support strong LNG cargo pull from the US Gulf Coast to Asia. Japan, South Korea, and China remain the dominant buyers.
The EIA's STEO assumptions are worth noting: based on the assumption that Hormuz remains largely closed, the EIA had modeled Brent at $105/bbl for June-July. The actual market has fallen well below that forecast, reflecting faster-than-expected normalization of shipping. The EIA now sees Brent averaging $79/bbl in 2027 as flows fully normalize.
For procurement teams, the return of oil to pre-war levels below $70 is a significant risk-off signal for commodities broadly. The recommended strategy: lock in H2 2026 crude coverage at current levels given that the geopolitical risk premium has largely unwound but OPEC+ spare capacity discipline remains uncertain. For natural gas buyers, Henry Hub at $3.18 offers reasonable value against the EIA's H2 average forecast of $3.34. European gas buyers should note that storage at 48% is below seasonal norms — any cold snap or supply disruption this winter could trigger a sharp TTF price spike. Asian LNG buyers should monitor the JKM-HH spread; with JKM at $16 vs HH at $3.18, margin for arbitrage cargoes remains healthy. The UAE's exit from OPEC and ability to ramp production aggressively is the wildcard — if it accelerates exports, $60 WTI is possible by Q4. Recommend layered hedging: 50% coverage at current levels, leaving flexibility for opportunistic topping up on dips below $65.