Topic 4: CRUDE: REELING IN TERROR

Crude oil prices in June 2025 experienced significant volatility, ultimately ending the month on a bearish note. Both Brent and WTI crude retreated to the $66–$68 per barrel range, despite a sharp rally earlier in the month. The initial surge in oil prices was driven by heightened geopolitical tensions in the Middle East, particularly the escalating conflict between Israel and Iran. Fears of a potential disruption in crude shipments through the Strait of Hormuz—one of the world’s most critical oil transit points—pushed Brent crude to a six-month high of $74 per barrel. Additional market anxiety stemmed from cyberattacks on Saudi Aramco infrastructure and broader instability in West Asia, prompting traders to price in a geopolitical risk premium. However, as diplomatic efforts progressed and ceasefire talks gained momentum, tensions began to ease, triggering a sharp correction in oil prices by mid-June. This decline was further reinforced by the release of U.S. inventory data showing crude stockpiles rising to a 10-month high, signaling weakening demand and potential oversupply. Economic uncertainty in China and stagnant industrial activity in Europe also weighed on demand expectations, while U.S. summer travel demand offered limited support. On the supply side, although OPEC+ maintained production cuts and Russian exports declined due to both quota commitments and technical disruptions, these efforts were insufficient to counteract bearish pressures. Market sentiment was further undermined by a lack of clear guidance from OPEC+ and unresolved tensions between Saudi Arabia and Russia over future output levels. Meanwhile, the delayed refill of the U.S. Strategic Petroleum Reserve removed a key source of potential demand, exacerbating the downward trend. As speculative investors reduced long positions, oil prices continued to decline. By month-end, the market had shifted back to fundamentals, with prices stabilizing lower amid easing geopolitical risks, rising inventories, and subdued global demand.

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