Oil prices fell to around $72 a barrel on Thursday, their lowest level since the start of the US-Iran conflict in February, as easing geopolitical tensions and improving shipping conditions in the Strait of Hormuz boosted market confidence.
Brent crude futures for August delivery dropped $1.06, or 1.4%, to $72.68 a barrel by 0639 GMT, while US West Texas Intermediate (WTI) crude fell 76 cents, or 1.1%, to $69.58 a barrel.
According to Oilprice.com, crude prices declined from $76.75 per barrel on Tuesday to $73.50 on Wednesday, extending losses after surging earlier in the conflict amid fears that tensions could disrupt oil shipments through the Strait of Hormuz.
Analysts attributed the decline to expectations of increased Middle Eastern oil supply, as well as prospects for higher Iranian exports following a temporary easing of US sanctions.
Market sentiment also improved on hopes that the recent US-Iran agreement would help keep the strategic waterway open. Reports of a modest increase in tanker traffic through the Strait of Hormuz further reassured traders.
A preliminary agreement reached last week to end the US-Israeli conflict with Iran, which began on February 28, has enabled shipping traffic through the strait to resume.
The accord provides a 60-day window for negotiations on more contentious issues, including Iran’s nuclear programme. US Energy Secretary Chris Wright said oil shipments would continue through the strait even if the agreement ultimately failed, adding that Iran would be unable to close the waterway again.
To ease congestion, Oman opened temporary shipping routes on Wednesday to facilitate tanker departures from the strait. The International Maritime Organization and Omani authorities are coordinating vessel movements through the area.
According to CNN, traders remain focused on whether maritime traffic continues to flow smoothly and whether broader tensions across the Middle East remain contained.
On Tuesday, US President Donald Trump said a record 19 million barrels of oil passed through the Strait of Hormuz on Monday, helping drive prices lower.
“19 million barrels of oil flowed out of the Hormuz Strait yesterday, an all-time record. Oil prices are tumbling down, and the world is a much safer place,” Trump wrote on social media.
