Oil prices kept falling Thursday, moving closer to the levels seen before the war, as tankers that had been stuck in the Strait of Hormuz began making their way through following a preliminary deal to end the U.S.-Israeli conflict with Iran.
Brent crude futures for August delivery dropped 40 cents — a decline of 0.54% — to $73.34 per barrel as of early Thursday morning, while U.S. West Texas Intermediate slipped 27 cents, or 0.38%, to $70.07 per barrel.
August Brent was trading below the September price of $73.59, a signal that short-term oil supplies are plentiful.
IG analyst Tony Sycamore noted in a written statement: “The speed of this decline has caught plenty off guard as markets price in a much faster return of Middle Eastern barrels than most had anticipated just a fortnight ago.”
On Wednesday alone, Brent dropped more than $3 and WTI settled nearly $3 lower as fears over supply disruptions continued to ease.
U.S. Energy Secretary Chris Wright told a forum Wednesday that oil flow through the Strait of Hormuz had nearly returned to pre-war levels. He said at least 20 million barrels had passed through the strait in the previous 24 hours. Wright cautioned that full normalcy would still take a few weeks, as the waterway needs to be cleared of mines.
The preliminary ceasefire agreement reached last week brought an end to the U.S.-Israeli war with Iran, which began on February 28. The deal allowed vessel traffic through the strait to resume and established a 60-day window for negotiations on more complex issues, including Iran’s nuclear program. Wright said oil would keep flowing through the strait even if the deal were to collapse, and that Iran would not be able to shut it down again.
On Wednesday, Oman opened temporary shipping routes to help tankers leave the Strait of Hormuz, with coordination between Omani officials and the International Maritime Organization. Qatar’s prime minister traveled to Oman for discussions on launching broader talks about the future management of the strait, involving Iran, Iraq, and Gulf nations.
Meanwhile, the Energy Information Administration reported Wednesday that total U.S. crude oil stockpiles fell to their lowest point since 1984 last week, driven by strong refining activity and the release of oil from the nation’s emergency reserve. Despite the alarming inventory figure, traders appeared largely unconcerned, keeping their attention focused on developments in the Strait of Hormuz.
