Brent crude futures traded just above $72 a barrel on Friday, while West Texas Intermediate settled below $69, as the market absorbed a significant rebound in Persian Gulf supply.
The price action was muted by thin liquidity, with trading volumes depressed due to the US Independence Day holiday.
Despite the backdrop of ongoing tensions in the Middle East, the immediate supply shock has faded as flows from the region have stabilized near pre-conflict levels.
The primary driver of the current market equilibrium is a sharp increase in OPEC output.
According to data cited by Hindu Businessline, OPEC crude production rose by 2.34 million barrels a day in June.
This surge in supply is fomenting a new surplus in key parts of the global market, effectively capping upside potential for crude prices.