- Global crude prices fell as Strait of Hormuz traffic resumed.
- Initial US-Iran accord restored confidence in oil supplies.
- Tanker flows almost at pre-conflict levels, easing concerns.
Global crude prices continued to retreat on Thursday, moving closer to levels seen before the outbreak of the US-Iran conflict, as tanker traffic resumed through the Strait of Hormuz and immediate concerns over oil supplies began to ease.
The decline comes after an initial agreement to end the conflict between the US, Israel and Iran helped restore confidence in one of the world’s most critical energy shipping routes. Market participants are now betting that crude supplies from West Asia will normalise faster than previously expected, reducing fears of a prolonged energy shock.
Reuters reported that the resumption of tanker movements through the Strait of Hormuz has significantly eased supply concerns that had driven oil prices sharply higher during the conflict.
Brent and WTI Extend Losses
Brent crude futures for August delivery slipped 40 cents, or 0.54 per cent, to $73.34 a barrel during early Asian trade. US West Texas Intermediate (WTI) crude also declined, falling 27 cents, or 0.38 per cent, to $70.07 per barrel.
The weakness followed another sharp fall in the previous session, when Brent lost more than $3 a barrel while WTI also settled nearly $3 lower.
Another sign that short-term supply pressures have eased was visible in the futures market, where August Brent traded below the September contract. September Brent was quoted at $73.59 a barrel, indicating expectations of comfortable near-term supplies.
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Markets Price in Faster Return Of Crude Supplies
According to market analysts, traders have rapidly shifted their expectations following signs that crude exports from the Gulf are recovering.
The renewed confidence follows an initial accord reached last week aimed at ending the US-Israeli conflict with Iran, which began on February 28. The agreement provides a 60-day negotiation window to address more complex issues, including Iran’s nuclear programme.
Hormuz Traffic Returns, But Full Recovery May Take Time
The Strait of Hormuz, through which around a fifth of the world’s oil supply normally passes, has gradually resumed operations after weeks of disruption.
US Energy Secretary Chris Wright said on Wednesday that crude flows through the waterway had almost returned to pre-conflict levels. According to him, at least 20 million barrels passed through the Strait during the previous 24 hours.
However, he cautioned that complete normalisation could still take several weeks as demining operations continue.
Wright also expressed confidence that oil shipments would continue even if the current diplomatic agreement were to collapse, adding that Iran would not be able to shut the Strait again.
Regional Efforts Support Shipping Recovery
Efforts are also underway across the Gulf to ensure smoother maritime movement.
Oman has opened temporary shipping routes to facilitate tanker departures from the Strait of Hormuz. The International Maritime Organization is working alongside Omani authorities to coordinate vessel movements.
Meanwhile, Qatar’s Prime Minister travelled to Oman for discussions aimed at launching negotiations involving Iran, Iraq and Gulf states over the future management of the strategic waterway.
These developments have reinforced market expectations that the worst disruptions to global oil shipments may now be over.
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Supply Route Overshadows US Inventory Data
Despite fresh data showing tightening crude inventories in the United States, traders remained largely focused on developments in the Middle East.
The US Energy Information Administration (EIA) reported that the country’s crude oil stockpiles fell to their lowest level since 1984 last week, driven by strong refinery demand and releases from the Strategic Petroleum Reserve.
Ordinarily, shrinking inventories would support higher oil prices. However, investors largely overlooked the data as easing concerns over the Strait of Hormuz continued to dominate market sentiment.
The sharp reversal in crude prices underscores how closely energy markets remain tied to geopolitical developments.
While oil prices surged above $100 a barrel during the height of the conflict amid fears that the Strait of Hormuz could remain blocked, the reopening of the vital shipping route has quickly changed sentiment.
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