Oil prices extended their slide on Wednesday, falling more than 1 percent and trading near four-month lows, driven by expectations that more oil tankers stranded in the Gulf will move out of the Strait of Hormuz. Brent crude futures dropped 78 cents, or 1 percent, to $76.30 a barrel as of 06:50 a.m. Saudi time. US West Texas Intermediate (WTI) crude slipped 78 cents, or 1.1 percent, to $72.43 a barrel. Both benchmarks settled down around 1 percent on Tuesday, touching their lowest levels since early March.
Positive Signals from the Persian Gulf
“Positive signals from the Persian Gulf are fuelling optimism about oil flows through the Strait of Hormuz. Vessel crossings increased in recent days, although they remain well below pre-war levels,” ING commodity strategists said in a note on Wednesday. The comments came as ship-tracking data showed that three stranded supertankers passed through the strait on Tuesday.
The UN shipping agency announced that an evacuation plan is underway to enable hundreds of ships with 11,000 seafarers stranded in the Gulf to sail through the strait, following the US-Iran ceasefire deal.
US-Iran Tensions and Sanctions Waiver
Prices have also come under pressure this week after Washington granted Tehran a 60-day sanctions waiver following initial peace talks, allowing Iran to sell oil. Additionally, hostilities in Lebanon have eased, further supporting the outlook for smoother crude flows.
“Crude oil prices were weighed down by hopes of easing US-Iran tensions and a recovery in oil shipments through the Strait of Hormuz,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting. “Further progress in nuclear negotiations could push prices back to pre-war levels,” he added.
Oman-Iran Talks and Nuclear Inspections
On Tuesday, Oman and Iran agreed to continue discussions about the future administration of navigation in the Strait. US Secretary of State Marco Rubio stated that any Iranian attempt to levy transit fees would violate international law.
However, uncertainty remains over the durability of the accord. US President Donald Trump said on Tuesday that Iran had agreed to nuclear inspections into “infinity,” while Tehran denied making such a concession in negotiations.
Market Monitoring and Crude Inventories
Investors are closely watching how quickly Middle Eastern producers can restore exports and whether more ships will enter the region. An Iranian military source told Fars news agency that a limited number of vessels are being allowed to pass through the strait each day under coordination with Iran’s Revolutionary Guards Navy.
Meanwhile, crude stocks fell by 765,000 barrels in the week ended June 19, according to market sources citing data from the American Petroleum Institute released on Tuesday. Nine analysts polled by Reuters estimated, on average, that crude inventories fell by about 4.5 million barrels in the last week.
