The Brent crude oil price steadied above $73 per barrel on Monday but remains on course for a near 20% decline this month and 23% for the quarter, as US-Iran hostilities flare despite ongoing peace overtures. Fresh strikes and drone attacks have clouded what had been a broadly bearish outlook driven by expectations of a diplomatic settlement.
Strait of Hormuz Attack Triggers US Military Response
The immediate trigger was an Iranian drone strike on the Singapore-flagged merchant vessel M/V Ever Lovely, which was transiting the Strait of Hormuz along the Omani coast when it came under attack.
The US military responded on 26 June. US Central Command said its strikes targeted Iranian missile and drone storage facilities and coastal radar positions near the Strait of Hormuz and on Qeshm Island.
Iran then launched its own missile and drone operation against US military sites in Kuwait and Bahrain, warning that further escalation would receive a ‘crushing response.’ BBC News reported that Iran’s foreign ministry blamed the ‘treaty-breaking US regime’ for the deteriorating situation.
Donald Trump said the US strikes reflected Iran ‘violating the ceasefire’ and warned ‘there may come a point when we are no longer able to be reasonable.’
Iran’s attacks across the region were not limited to sites linked to US forces. Arab News Japan reported that a major drone strike on Kuwait International Airport on 3 June killed one person, wounded dozens, and caused significant damage to a passenger terminal, briefly disrupting traffic at one of the Gulf’s busiest aviation hubs.
Saudi Arabia, Bahrain, Jordan, Kuwait, Qatar, the UAE, and the United States issued a joint statement strongly condemning Iran’s attacks. The Saudi Press Agency published the statement, which described Iran’s ‘indiscriminate and reckless missile and drone attacks against sovereign territories across the region.’
Peace Talks and the Brent Crude Oil Price Outlook
Peace talks are set to resume in Doha, though Iran’s foreign ministry said no sessions had been scheduled for the coming days, adding a layer of uncertainty to the diplomatic track that has been the principal driver of oil’s monthly decline.
The mixed signals have slowed the Brent crude oil price slide but have not reversed the broader trend. Investors continue to position for an eventual deal and the resumption of normal oil market flows.
Structural supply forces reinforce that bearish bias. The US Energy Information Administration’s August 2025 Short-Term Energy Outlook projected Brent would decline from above $70 per barrel to an average of approximately $58 per barrel in the fourth quarter of 2025 and around $50 per barrel in early 2026, according to Anadolu Agency. The EIA put the full-year 2025 Brent average at $67.22 per barrel and the 2026 average at $51 per barrel.
Global inventory dynamics support the downward trajectory. The Oil & Gas Journal reported that the same EIA outlook projected global oil inventory builds averaging more than 2 million barrels per day in the fourth quarter of 2025 and first quarter of 2026, approximately 800,000 barrels per day above the previous month’s forecast. US crude output was projected to hit a record near 13.6 million barrels per day in December 2025 before easing to 13.1 million barrels per day by the fourth quarter of 2026.
London markets saw offsetting strength elsewhere on Monday. Defence stocks rose after Prime Minister Keir Starmer’s speech, and metals prices provided a further boost to the broader index, cushioning any energy-sector drag on the FTSE.
The next test for the Brent crude oil price will be whether Doha talks produce a credible timetable. Any confirmed resumption of formal negotiations would likely accelerate the monthly decline; a further breakdown raises the risk of a short-covering bounce from current levels.