Brent crude closed at $75.20/bbl per barrel on Thursday, up +0.51% in thin holiday trading. WTI settled at $71.50/bbl, gaining +0.63%. Both benchmarks are on track for their fourth consecutive weekly loss, according to market data—a slide that has erased nearly all the war premium built up since February.
Oil flows through the Strait of Hormuz have surged past 10 million barrels per day with American military support, a U.S. official told Bloomberg . That's half the pre-war level, but enough to flip the market from scarcity to glut. Saudi Arabian crude exports have climbed to 90% of their pre-war level, and the prompt spread for Brent has been in contango—a sign of oversupply—for much of this week, Bloomberg reported . When near-term oil is cheaper than future contracts, it means traders see more barrels than buyers.
How Low Can It Go?
Citigroup says Brent could plunge to as low as $60 per barrel by year-end, recommending clients "sell any summer rallies," according to a note carried by Bloomberg . The bank expects the U.S.-Iran memorandum of understanding to hold and turn into a deal over the coming months . Citi analysts including Francesco Martoccia wrote that "fundamentals are rapidly reasserting themselves," noting that shipping flows are normalizing, Chinese buyers remain absent, physical crude markets have weakened sharply, and inventories have drawn far less than expected .
Citi isn't alone. Goldman Sachs has warned that the global oil market is poised to return to oversupply as the Iran conflict fades and Hormuz traffic recovers, while Morgan Stanley has cut its oil price forecasts twice in recent weeks, citing mounting oversupply risks . The chorus is bearish, and the curve agrees. Brent futures are trading in a bearish contango price structure that signals short-term oversupply, with discounts on the closest contracts, and premiums for physical crude have also plunged in recent days .
The problem is simple: the barrels that were trapped behind the blockade didn't vanish. A gush of oil is entering the market at a time when many of the wartime supply workarounds are still in place—including releases of emergency reserves and depressed imports by China . HSBC researchers described a "mini-glut" as the reopening of the Strait of Hormuz translates into a near-term supply overhang of Middle East oil, entering a market with lower demand thanks in part to China slashing imports .
Can Canada Fill the Asian Gap?
While the Gulf floods the market, Canada is betting on the opposite problem: too much oil, not enough export capacity. Prime Minister Mark Carney and Alberta Premier Danielle Smith presented a proposed pipeline route this week that would add over one million barrels per day of tanker-loading capacity from southern British Columbia, extending from Bruderheim, northeast of Edmonton, to the southern B.C. coast . The pipeline is expected to carry 1 million barrels of oil per day to the Pacific coast, allowing Canada new access to Asian markets and reducing its economic dependence on the United States, with Carney setting a goal to double Canada's non-U.S. exports in the next decade .
The timing is deliberate. Since the Trans Mountain expansion opened through the B.C. southern coast in 2024, roughly two-thirds to three-quarters of the crude shipped from Canada's Pacific Coast has gone to Asia, helping Canada reduce its dependence on the U.S. market . The new line would follow the Trans Mountain corridor, sidestepping the environmental and Indigenous opposition that killed the Northern Gateway project. It's a rare moment of federal-provincial alignment in Canadian energy policy—and a direct response to trade hostilities with Washington.
