25.06.202609:50 Forex Analysis & Reviews: Oil Continues to Decline, and Today's News from Qatar Explains Why

Oil prices continue to decline, and today's news from Qatar provides an explanation. Brent has already lost all the military gains, and physical signs of supply recovery are multiplying day by day. Qatar has joined other Persian Gulf countries in resuming oil sales to Asian markets. Reports indicate that a shipment of "Al-Shaheen" crude has been sold to Taiwan's Formosa Petrochemical for delivery in August-September, while "Marine" and "Onshore" grades were sold to an Indian refinery last week. These are the first recorded transactions involving Qatari oil with Asian refiners since the war began.

The picture is developing into a cohesive flow, and a direct parallel can be drawn with what I've mentioned earlier. Just a few days ago, we saw only the first cautious signs of normalization when two tankers turned around in the Indian Ocean and headed for the Middle East, and U.S. Central Command reported 55 vessels passing through the strait in a single day. Now, we are discussing a full resumption of commercial sales. Exports from the UAE have resumed, and shipments from Iraq and Kuwait have intensified, with ADNOC having previously notified clients of the resumption of dispatches.

It is also worth mentioning the gas front, which is adding to the disinflationary effect. Qatar is successfully guiding LNG tankers through the strait and plans to quickly ramp up production of super-cooled fuel, restoring a significant portion of export capacity within two months. Meanwhile, QatarEnergy has offered to export a batch of gasoline from its Mesaieed plant, indicating increased refining. All of this is weighing on prices not only for crude oil but also for petroleum products, thereby directly contributing to lower inflation, which is being closely monitored by central banks.

Here lies the main conclusion that connects today's news with a broader picture. The decline of Brent from a peak above $108 to current levels below $77 is a direct result of the supply recovery we are now witnessing in real time through Qatari transactions and tanker traffic.

Goldman Sachs and Morgan Stanley's predictions of Brent around $80 for the fourth quarter are based on this scenario of a rapid return of Gulf supplies to the market. However, it is essential to keep in mind traders' warnings that the market can overreact in both directions; just as it previously priced in shortages, it can now price in excess faster than it materializes.

Regarding the current technical picture for oil, buyers need to overcome the nearest resistance at $74.85. This will allow targeting $81.38, above which it will be quite challenging to break through. The furthest target will be around $86.67. In the event of an oil price drop, bears will attempt to take control at $67.77. If successful, breaking through this range will deal a significant blow to the bulls' positions and drive oil down to a low of $59.96, with a potential target of $51.99.