Oil Heads for Biggest Quarterly Drop Since 2020 on Glut Fears

Oil prices are heading for the largest quarterly decline since the pandemic, as Morgan Stanley warns of a potential glut and flows through the Strait of Hormuz accelerate following progress in US-Iran peace talks.

The crude market has been under pressure this quarter, with benchmark contracts sliding as supply concerns ease. The prospect of increased Iranian exports, facilitated by diplomatic progress, has added to bearish sentiment. Morgan Stanley's warning of a looming glut reflects expectations that global supply could outpace demand in the coming months, particularly if OPEC+ continues to unwind production cuts.

For energy traders, the sharp decline in oil prices presents both risks and opportunities. The Brent-WTI spread has narrowed as supply dynamics shift, and the contango structure in futures markets signals ample near-term supply. Traders can monitor real-time price movements on NowPrice's live fuel dashboard to track the evolving market. The acceleration of flows through the Strait of Hormuz, a key chokepoint for global oil shipments, underscores the market's focus on geopolitical developments.

Looking ahead, traders will watch for further signals from US-Iran negotiations and any OPEC+ policy adjustments. Key data releases, including weekly US inventory reports and monthly demand forecasts from the IEA and OPEC, will provide additional direction. The potential for a sustained glut could keep prices under pressure, but any disruption to supply from geopolitical tensions or hurricane season could quickly reverse the trend.