Oil prices steady at pre-Iran war levels

Oil prices were stable around pre-Iran war levels on Monday as Saudi Arabia slashed its official selling prices and after OPEC+ agreed to further increase its output targets from August, while exports from key producers via the Strait of Hormuz are recovering.

Brent crude futures fell 4 cents, or 0.06%, to $72.08 a barrel at 1322 GMT after settling 0.45% higher on Friday. U.S. West Texas Intermediate crude was at $68.62 a barrel, down 7 cents, or 0.1%.

There was no settlement for WTI on Friday as U.S. markets were closed for a public holiday.

Both contracts were little changed last week after mostly falling over the past few weeks back to levels last seen in late February, prior to the start of the war.

“The downward move is still influenced by earlier stranded tankers managing to exit the Gulf, resulting in an increase in oil on water,” UBS analyst Giovanni Staunovo said.

Investors kept a close eye on talks between the U.S. and Iran over the fate of shipping through the Strait of Hormuz while keeping tabs on the recovery in Gulf oil exports.

The United Arab Emirates raised its crude output to near record highs above 3.8 million barrels per day in June after it quit OPEC to escape production caps, two people familiar with production data said on Monday.

Saudi Arabia has set the official selling price for its flagship Arab Light crude to Asia in August at $1.50 a barrel below the Oman/Dubai average, marking the biggest monthly cut in the price since Reuters records began in 2003.

The Organization of the Petroleum Exporting Countries and their allies including Russia agreed on Sunday to further increase output targets by 188,000 barrels per day from August,

 on top of similar increases for June and July.

However, the increase has remained largely on paper because of the Iran war, which closed the strait to tanker traffic for key OPEC producers, including Saudi Arabia, Kuwait and Iraq, capping their output.

“They are selling into a falling market, offering little hope of an imminent price recovery,” said PVM analyst Tamas Varga. “However, lower oil prices will undoubtedly stimulate demand further down the line.”

Elsewhere, Ukraine’s military said on Monday it struck Russia’s largest oil refinery in Omsk, as well as facilities in Yaroslavl and Leningrad regions overnight.