Every price move eventually comes to an end, and the current downtrend will reverse as well. Yet it would be foolish to believe that yesterday's welcome rebound in crude oil contracts from the day's lows marked the beginning of such a U-turn.

Although Russia is unable to contribute meaningfully to global supply, as it is itself forced to import refined products from India to ensure adequate domestic availability, developments related to the Strait of Hormuz, summarised below, continue to signal increasing crude oil availability from the Middle East. The most likely driver of yesterday's move was the swapping of the roles between products and crude oil: sell-off in the former, with the subsequent rise in the price of the latter plausibly triggered by substantial profit-taking in crack spreads ahead of the long US weekend.

Meanwhile, we have learnt over the past few days that:

•    US-Iran talks concluded in Doha without any breakdown, and Qatar has reported progress.
•    Kuwaiti oil production rose to 1.65 mbpd this month, up from 580,000 bpd in May (Reuters).
•    Saudi Arabia shipped 10 million barrels of crude from Ras Tanura through the Strait of Hormuz (Bloomberg).
•    UAE oil exports reached 3.7 mbpd in June (Kpler).
•    Front-month Brent spreads have moved and stayed in contango.

A sustained recovery in crude prices is more likely to materialise once the oil currently stranded on tankers and held in storage has been absorbed by the market, and if the recovery in production proves insufficient to offset the volumes currently transiting the Strait of Hormuz.

Happy 250th Birthday, America!

Looking back on the previous quarter of the millennium, there is no doubt that the one ahead will be at least as prosperous as the one just left behind. Although it sounds like a cliché, the US, depending on one’s taste or affiliation, has been, is, or will be again the world’s largest democracy and a truly free country. As Alexis de Tocqueville so astutely observed during his travels across the land almost 200 years ago, Americans generally believed that, unlike in Europe, where hereditary aristocracy determined status, people could improve their circumstances through work and initiative.

He concluded that America was free and democratic not because it had perfect institutions or because all citizens enjoyed equal rights, but because its political and social system encouraged widespread participation, limited concentrations of power, and fostered a culture of equality. These values are enshrined in the Declaration of Independence; just think of governments that derive their powers from the consent of the governed.

This tradition will continue, but whether the first 25 years of the next 250 years will resemble traditional values depends largely on the next 2.5 years. It is plain that even during his first term, the incumbent President sought to develop what is labelled the unitary executive, a theory of constitutional law holding that the President, as head of the federal government’s executive branch, must retain sole authority over executive administration and officials, thereby structuring control within a unified hierarchy. These efforts intensified during the second term.

Although this idiosyncratic governance is the polar opposite of traditional American social and political values, its impacts over the last 1.5 years are there for everyone to see. The immediate path the country takes, with far-reaching consequences, depends on, as an FT columnist put it, whether the Trumpian hard right is a new normal or a self-destructive decadence. Without drawing a conclusion, it is noticeable that the President’s influence, possibly due to policy moves and decisions that met with disagreement from allies and the electorate, is on the wane. His approval rating is close to an all-time low (59% disapprove of his job performance, according to the latest polls). The Supreme Court, a pliant ally in 2025, has recently ruled in opposition to him (regarding import duties, birthright citizenship, and the removal of a Fed governor). Several members of his party are now pushing back against him (including the $1.8 billion weaponisation fund), and his allies abroad also feel emboldened to freely criticise him (such as Italy’s Giorgia Meloni).

His two signature policy measures on the global stage—the battle for economic dominance coupled with isolationist economic approaches, and the Iranian war—have also produced questionable results. On the first issue, although the country’s economy is expanding at a solid rate and unemployment is historically low, inflation is well above target, consumer confidence has weakened, and import tariffs, which have been struck down by the Supreme Court, have increased costs. The US trade balance, notwithstanding major shifts in trade patterns, has changed little. The 2025 deficit narrowed by a negligible $2 billion, which is well within the margin of error.

As for Iran, it would be untrue to conclude that the US has lost the war, but it is certainly not winning it (and neither is Iran, for that matter). It has taken $25 billion in direct costs and $67 billion in additional funding requests, a bombing of a girls’ school in Iran, the closure of the Strait of Hormuz—which drove crude prices to $126, domestic US gasoline prices to $4.50 per gallon, and inflation above 4%—to begin negotiations, and peace talks have, frankly, produced dubious outcomes. The Iranian regime has not been overthrown, its nuclear arsenal has not been destroyed, and its proxies have not been eliminated. While the ultimate objectives may still be achieved, the financial, military, and political costs appear prohibitive. As oil prices have dropped sharply over the last eight weeks following the tentative reopening of the Strait and sanctions on Iranian exports have been lifted, the current status quo seems mutually acceptable to both parties, at least ahead of the midterm elections.

A weakened President, however, is not a lame-duck President. He will do his utmost to pursue his controversial political, economic (and vanity) projects. Yet, as recent developments suggest, the worst, whether trade or military conflicts, may be behind us. If this is indeed the case, it would be a welcome outcome for the global economy, as well as for oil supply and demand. Following every step, social media post, and press conference of the most consequential US President in recent times will still be essential reading. But only after Americans have enjoyed their well-deserved barbecues and spectacular fireworks with family and friends, celebrating the remarkable accomplishments of the last 250 years.

Overnight Pricing