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JPMorgan Warns of Oil Flood After Hormuz Reopens
7 Jul
Summary
- Global oil surplus predicted due to returning Hormuz barrels.
- China's reduced imports are a major factor in the potential glut.
- Oil prices have fallen significantly since May, with discounts widening.
Oil prices have seen a dramatic shift, with Brent crude settling near $68 as of July 6, 2026, a significant drop from May's $107 a barrel. This decline is attributed to the reopening of the Strait of Hormuz, allowing millions of barrels to re-enter the global market.
Natasha Kaneva of JPMorgan Chase warned clients on July 4, 2026, about a potential temporary oil glut. Over 60 million barrels effectively frozen since February 2026 are now circulating. Major oil producers like Saudi Arabia and the UAE have restored export levels, while the US Strategic Petroleum Reserve continues its emergency release.
The primary driver of this emerging surplus is the reduced demand from China, which has not recovered its pre-crisis import levels. This absence of Chinese buyers means the newly available oil is overwhelming a system that had adapted to functioning without it, leading to record discounts for some crude grades.
