Growing crude flows through the Strait of Hormuz and expectations of higher regional supply are pushing oil prices lower.
Oil prices extended their decline on Thursday, falling to levels last seen before the Iran war began. Traders focused on recovering supply from the Middle East, while concerns over potential disruptions in the region continued to fade.
KEY DETAILS
Brent crude for August delivery dropped $1.08, or 1.46%, to $72.66 a barrel. U.S. West Texas Intermediate (WTI) fell 84 cents, or 1.19%, to $69.50 a barrel. Both benchmarks reached their lowest levels since February 27.
U.S. Energy Secretary Chris Wright said oil flows through the Strait of Hormuz are nearing pre-war levels, with at least 20 million barrels moving through the passage over the last 24 hours. He noted that full normalization could take several weeks while mine-clearing operations continue.
Analysts say outbound shipments from the Gulf have recovered faster than inbound traffic, as insurers and shipping companies still seek stronger safety assurances.
Additional pressure came from expectations that Iran could increase oil sales following temporary relief from U.S. sanctions. However, Goldman Sachs said it does not expect a major surge in Iranian production even if sanctions relief extends beyond August 21.
Meanwhile, Iraq is reportedly considering all options, including a potential departure from OPEC, if its production quota is not significantly increased.
On the geopolitical front, Ukraine said it struck an oil depot in Russia’s Krasnodar region and two refineries in the Ufa region.
MARKET REACTION
Energy stocks faced pressure as crude prices weakened. Lower oil prices also eased inflation concerns, while broader financial markets remained focused on Middle East developments and OPEC policy signals.
For traders, the sharp drop in oil highlights how quickly geopolitical risk premiums can disappear when supply disruptions fail to materialize.
Markets will now watch the pace of recovery in Strait of Hormuz traffic, developments surrounding Iranian sanctions, Iraq’s position within OPEC, and any escalation in Russia-Ukraine energy infrastructure attacks.
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Source: Reuters
Time: 3:00 PM EEST
