Middle East Crude Shipments Resume in Force as North Sea Brent Spot Falls to Two-Year Low
Taylor Wilson
Middle Eastern crude is surging into Europe after the Strait of Hormuz reopened. Forties — a key Brent benchmark grade — has fallen to a two-year low on the Platts pricing window, while derivatives markets have flipped into contango. Oversupply pressure is no longer a forecast; it is here.
How far has the spot market fallen?
Forties crude hit a two-year low on the S&P Global Platts window. WTI Midland slid to a three-month low.
This means → both benchmark component grades are weakening together. The pressure is systemic across the North Sea pricing complex, not confined to one grade.
In plain terms = more sellers than buyers — prices go down.
What are derivatives markets signalling?
The six-period Brent CFD flipped into contango for the first time since the US–Iran conflict — near-month prices now sit below deferred contracts.
The Brent DFL — the dated-to-frontline spread — also turned negative, meaning spot prices are below the nearest futures contract. Dubai benchmarks had already led the way.
This means → the market is saying "there is too much oil right now." Contango — a price curve where today's barrel is cheaper than tomorrow's — typically appears only when supply clearly exceeds demand.
Traders note that even though Hormuz shipping has not fully normalised, the market is already pricing in a glut.
How much Middle Eastern crude is heading to Europe?
At least six VLCCs carrying UAE and Omani crude are expected to sail for Europe next month. Roughly 31 vessels stranded during the earlier disruption are also being released.
The UAE is ramping up exports. Most cargoes were originally Asia-bound, but analysts say some could be diverted to Europe.
This means → even if Europe is not the primary destination, the spillover alone adds to an already saturated market.
Why is the timing so damaging?
The Middle Eastern return coincides with an Atlantic Basin supply peak: US Gulf Coast flows to Europe are running near 2 million barrels per day this month.
Kazakhstan's CPC Blend liftings in July are forecast to approach 1.8 million b/d — near a record high.
In plain terms = three supply waves are hitting Europe at once — Middle Eastern restarts, US exports, and record Kazakh volumes. The pressure is compounding.
What is Iran doing at the Strait of Hormuz?
Iran and Oman issued a joint statement saying they are studying future management of the strait, including charging fees for services provided.
Iran said last week that vessels need its permission and must buy insurance to transit. The service is free for now, but the move is widely seen as laying the groundwork for tolls.
US allies are pressing the Trump administration to reject Iran's fee plans, arguing acceptance would set a dangerous precedent for other waterways.
What determines where oil prices go next?
On Tuesday, WTI July fell 0.6% to $73.37/bbl; Brent August dropped 0.8% to $77.29/bbl. Both had already sold off sharply on Monday.
Saxo Bank analysts noted the US waiver on long-standing Iran sanctions "should help export some of the roughly 30 million barrels that left Iranian ports last week."
This reflects a shift in the key variable: supply is definitively rising. The question is now whether demand can absorb it — without a clear demand uptick, prices have little support.
Content is for reference only, not financial advice.