Brent crude has plummeted to its lowest price point since February 27, marking a return to valuations seen before the onset of the conflict.
Oil prices continued their downward trajectory, returning to levels last observed before the outbreak of the war in Iran, as anticipation of increased Middle Eastern supply offset concerns regarding global demand.
By 06:39 GMT, prompt-month Brent crude futures for August delivery dropped by $1.06 (1.44 percent) to $72.68 per barrel. Simultaneously, US West Texas Intermediate (WTI) decreased by 76 cents (1.08 percent), settling at $69.58 per barrel.
Both benchmarks have now reached their lowest points since February 27. The fact that August Brent is trading lower than September’s price of $73.59 indicates a surplus of short-term supply.
On Wednesday, Brent fell by more than $3 as supply anxieties diminished, while WTI also closed down by nearly $3.
US Energy Secretary Chris Wright stated during a forum that traffic through the Strait of Hormuz is nearing pre-war volumes, noting that at least 20 million barrels passed through the strait within the last 24 hours. However, Wright cautioned that a full return to normality would take several weeks, as the waterway still requires clearing of mines.
Prices for physical crude cargoes globally have been pushed lower by the increase in Middle Eastern supply and Iran’s expected boost in sales following a temporary lifting of US sanctions.
New routes
A preliminary agreement reached last week to end the US-Israeli war with Iran—which began on February 28—has facilitated the resumption of maritime traffic through the strait. This accord establishes a 60-day negotiation window to address more complex issues, including Iran’s nuclear program.
Secretary Wright asserted that oil flow through the strait will persist even if the current deal fails, maintaining that Iran would be unable to shut down the passage again.
Tensions remain over transit costs; Tehran intends to implement “maritime service fees,” while the United States maintains that the strait is an international waterway and must remain free of charges.
To assist tanker departures, Oman opened temporary routes on Wednesday, a move coordinated between Omani authorities and the International Maritime Organization.
On Thursday, Iran’s Revolutionary Guards condemned these new routes and warned that any vessels crossing the Strait of Hormuz without authorization “will be dealt with.”
