Oil Slumps as Middle East Tensions Ease and Tankers Return to Hormuz
Global oil prices fell to around $72 per barrel on Thursday, their lowest level since the United States-Iran conflict began in February, as improving supply conditions and easing geopolitical tensions dampened market concerns.
Brent crude futures for August delivery dropped by $1.06, or 1.44 per cent, to $72.68 per barrel by 0639 GMT, while U.S. West Texas Intermediate crude declined by 76 cents, or 1.08 per cent, to $69.58 per barrel.
According to Oilprice.com, crude oil prices fell from $76.75 per barrel on Tuesday to $73.50 on Wednesday after surging earlier during the conflict amid fears that tensions could disrupt shipping through the Strait of Hormuz.
Increased oil supply from the Middle East, coupled with expectations that Iran will expand exports following a temporary reprieve from U.S. sanctions, has weighed on physical crude prices worldwide.
Traders have also become more optimistic that the agreement between the United States and Iran will help keep the strategic waterway open, while reports indicate a modest increase in shipping traffic through the Strait of Hormuz.
A preliminary accord reached last week to end the U.S.-Israeli conflict with Iran, which began on February 28, has enabled the resumption of maritime traffic through the strait.
The agreement provides for 60 days of negotiations on more contentious issues, including Iran’s nuclear programme. Wright said oil would continue flowing through the strait even if the agreement collapsed, adding that Iran would be unable to shut the waterway again.
Oman on Wednesday opened temporary shipping routes to facilitate tanker departures from the Strait of Hormuz, with the International Maritime Organization and Omani authorities coordinating vessel movements.
According to CNN, traders are closely monitoring whether shipping continues uninterrupted through the strait and whether tensions remain contained across the Middle East.
On Tuesday, U.S. President Donald Trump said a record 19 million barrels of oil passed through the Strait of Hormuz on Monday.
“Nineteen million barrels of oil flowed out of the Hormuz Strait yesterday, an all-time record. Oil prices are tumbling down, and the world is a much safer place,” Trump wrote on his social media accounts.
