Oil Surges and European Gas Hits Three-Year High as US-Iran Strikes Derail Hormuz Deal Hopes

Oil prices extended gains and WTI crude reached overbought territory after the United States and Iran exchanged fresh strikes overnight, sharply dimming prospects for a near-term agreement to reopen the Strait of Hormuz. WTI's Relative Strength Index hit 77, a level indicating an overbought market following what traders described as a parabolic surge.

European natural gas benchmark futures surged to their highest level since January 2023, with the Wall Street Journal reporting prices at their highest since end of 2022, directly linking the move to escalating US-Iran hostilities. Natural gas futures were stalling just under the $2.996 resistance level in the US market.

Latest EIA data published alongside the geopolitical developments showed US crude production rose to 13.792 million barrels per day in June from a revised 13.755 million bpd in May, though Lower 48 production growth has slowed considerably over the past 12 months. Texas output fell 75,000 bpd and New Mexico dropped 32,000 bpd month-on-month, partially offset by gains in the Gulf of Mexico, up 88,000 bpd, and North Dakota, up 39,000 bpd.

US oil demand came in at 20.736 million bpd in June, down 346,000 bpd or 1.6% year-over-year. Crude inventories fell amid continued Strategic Petroleum Reserve draws. US crude imports from Venezuela climbed to 630,000 bpd in June from 471,000 bpd in May. On the export side, total US crude exports reached 4.735 million bpd in June, with Japan the top buyer at 846,000 bpd, followed by the Netherlands at 686,000 bpd and South Korea at 672,000 bpd.