During the European trading session on Monday, July 6, Brent crude oil futures experienced volatile trading at low levels, currently down over 1% and hovering near $71 per barrel.
The crude oil market is currently grappling with a dual transformation involving both supply-demand dynamics and geopolitical factors.
Benjamin Picton, a senior market strategist at Rabobank, noted that while the gradual production increase by OPEC+ and the resumption of traffic through the Strait of Hormuz are putting short-term pressure on Brent prices, transportation bottlenecks and geopolitical factionalization are becoming more critical variables influencing prices.
The "service fee" Iran intends to levy and its differential terms for China could potentially fragment the global oil market into distinct pricing systems.
Short-term Price Movement: Supply Increase News Exerts Pressure, Brent Gives Up Gains
Brent crude oil recorded its first weekly gain in nearly a month last week.
However, the upward momentum failed to sustain—over the weekend, OPEC+ decided to ease production cut restrictions starting in August, increasing output by 188,000 barrels per day. This marks the third consecutive month of implementing a production increase of the same scale, following June and July, signaling that the group is steadily exiting the production cut agreement reached in 2023 according to its established pace.
Additionally, combined with news of continued oil tanker traffic through the Strait of Hormuz, oil prices faced downward pressure in early trading this Monday.
Critical Bottleneck: Increased Production Does Not Guarantee Delivery; Transportation Risk Remains a Core Issue
Picton further pointed out that the market often focuses excessively on OPEC+'s production figures themselves, easily overlooking a more practical challenge: can the increased crude oil actually be delivered smoothly to buyers?
Currently, the new production primarily originates from the Persian Gulf region and Russia, which happen to be the areas with the highest concentration of geopolitical risks.
The safety of passage through the Strait of Hormuz remains unresolved, with Iran potentially interfering with tanker transit at any time through "service fees" or military friction. Regarding Russia, drone attacks by Ukraine on refineries, pipelines, and storage facilities have become routine, with a recent trend of intensification.
Even if production numbers look favorable on paper, if the oil cannot be transported, the notion of ample supply remains merely theoretical.
Picton believes that the smoothness of the transportation link is the "last mile" determining the actual tightness or looseness of current oil prices, and its importance far exceeds the nominal figures of production increases or cuts. Investors should pay more attention to shipping insurance, the proportion of tankers rerouting, and geopolitical突发事件.
Geopolitical Fragmentation: Iran's "Service Fee" Triggers Market Fragmentation
Iran reiterated over the weekend that, following the expiration of the 60-day negotiation period initiated after the signing of the US-Iran Memorandum of Understanding, it will impose a "service fee" on vessels passing through its territorial waters in the Strait of Hormuz.
Picton noted that this seemingly minor development precisely validates his long-term prediction—the "oil market" is splitting into multiple "oil sub-markets." Pricing power and access terms will be determined by the geopolitical camp to which one belongs, and transactions reached by various parties will be accompanied by a series of reciprocal exchange conditions.
According to the daily chart, the moving averages for Brent crude oil futures are arranged in a bearish pattern, with prices pressured by the MA20, MA50, MA100, and MA200 moving averages. Having declined continuously from the year's high of $119.45 and the secondary high of $115.21, the medium-term downtrend is clear. After previously testing a low of $70.13, prices showed a slight stabilization and a weak rebound. However, the multiple moving averages above form a dense resistance zone, presenting extremely strong obstacles to any recovery.
The MACD indicator is below the zero line, with the DIFF and DEA lines converging and nearing a golden cross, showing only faint red bars. Bearish momentum has slightly diminished, but there is no clear reversal signal for a bullish trend, indicating merely a minor stabilization following an oversold condition.
As of 15:52 Beijing time on July 6, Brent crude oil futures were quoted at $71.08 per barrel.
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