The price of a barrel of the important North Sea oil Brent has fallen by 43 percent since its high at the end of April.Image: www.imago-images.de
Concerns about oversupply are growing on the oil market. Several sources of supply are coming back at the same time, while China remains cautious as a major buyer.
Jul 6, 2026, 2:03 amJul 6, 2026, 2:03 am
There is a risk of oversupply on the oil market. As the Bloomberg agency reports, significantly more oil is currently coming onto the market: deliveries from the Gulf region have been released again, additional exports from Saudi Arabia and the United Arab Emirates and Iranian oil is available again. At the same time, China continues to buy significantly less crude oil than before the war. The price of a barrel of the important North Sea oil Brent has fallen by 43 percent since its high at the end of April.
The trigger is the peace agreement between the USA and Iran, which provides for the reopening of the Strait of Hormuz. A large part of the oil from the Gulf region is transported through this important shipping route. According to the agreement, more than 60 million barrels of oil that had been stuck since the start of the war came onto the market.
In addition, according to the report, Saudi Arabia and the United Arab Emirates are once again delivering about as much oil as before the war. Iranian oil can also be bought again after US sanctions exemptions. At the same time, millions of barrels continue to flow from US strategic reserves. These releases were originally decided to stabilize supplies during the crisis. Now they are increasing the offer even further.
More supply, fewer buyers
The extra oil hits a market that has adapted to lower supplies during the war. China has significantly reduced its purchases and is importing around 5 million barrels less per day than before the war.
The consequences can be seen in prices and trade flows. In the US, Europe and Asia, key futures contracts for later oil deliveries currently cost more than short-term deliveries. Such a market structure can encourage traders to store oil because selling it at a later date is more likely to be profitable. At the same time, individual deliveries are looking for buyers that are unusually far away: According to Bloomberg, oil from the United Arab Emirates is being offered as far away as the USA, and a tanker carrying Venezuelan crude oil has been waiting for a buyer off India for more than two weeks.
Whether the oversupply continues depends primarily on three factors: the stability of the agreement, the production policy of OPEC+ and demand from China. OPEC+ is an association of important producing countries around Saudi Arabia and Russia that regularly coordinate their oil production. Some analysts believe the effect of previously blocked oil inventories is only temporary.
In addition, according to the International Energy Agency, releases from strategic reserves will soon decline sharply. For OPEC+, this could raise the question of whether the group needs to limit its production again in order to support prices.