Crude Oil Prices Decline Towards $70 as Tankers Resume Operations in Hormuz Following US-Iran Peace Agreement
Crude oil prices fell sharply on Thursday, approaching pre-war levels as tanker traffic through the Strait of Hormuz increased, alleviating earlier supply concerns. After peaking above $126 per barrel during the recent Middle East crisis, oil prices have now dropped significantly, nearing the $70 mark. As of 7 am IST, Brent crude was priced at $72.90, down 1.14%, while West Texas Intermediate (WTI) crude traded at $69.61, down 1.04%.
Market Dynamics Shift
The decline follows a drop on Wednesday, which saw prices reach four-month lows. Improved shipping activity in the strategic Strait of Hormuz and expectations of higher Iranian exports have contributed to reduced fears of supply disruptions. Brent crude futures fell by $1.37, or 1.8%, to $75.71 per barrel, while WTI crude decreased by $1.08, or 1.5%, to $72.13 a barrel. Brent hit its lowest level since February 27, and WTI reached its weakest point since early March.
Neil Crosby, head of research at Sparta Commodities, noted the potential for increased physical supply from the Arab Gulf, suggesting a temporary oversupply situation. “We are in a mini glut for now as demand needs to be tempted back,” he stated. Approximately 20 million barrels of oil passed through the Strait of Hormuz in the last 24 hours, according to US Energy Secretary Chris Wright, indicating a return to normal shipping flows.
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