Oil prices fell for a third consecutive session on Wednesday as improving shipping activity through the Strait of Hormuz and progress in U.S.-Iran negotiations reduced concerns about lasting disruptions to Middle Eastern energy exports.
By 05:39 ET (09:39 GMT), Brent Oil Futures for August delivery had dropped 2% to $75.52 a barrel, while West Texas Intermediate (WTI) crude futures declined 1.8% to $71.89 a barrel.
Both oil benchmarks closed the previous session near four-month lows.
Market sentiment was influenced by growing evidence that traffic through the Strait of Hormuz is gradually recovering after months of conflict disrupted one of the world’s most important oil and gas transit routes.
Reports indicated that several supertankers previously delayed in the Gulf have resumed operations and successfully transported crude cargoes out of the region. At the same time, more liquefied natural gas vessels linked to Qatar have restarted voyages through the strategic waterway.
Traders view these developments as a sign that regional energy supply chains are steadily returning to normal.
The United States and Iran have agreed to a 60-day framework designed to support negotiations toward a broader agreement, while Washington has introduced a temporary sanctions waiver allowing certain Iranian crude exports to continue through August.
The moves have increased expectations that additional oil supplies could soon re-enter global markets.
“Estimates suggest that roughly 6-7m b/d of oil moved through the strait in recent days, which is still far below pre-war flows of around 20m b/d. However, with pipeline diversions for Saudi Arabia and the UAE, we only need to see oil flows through the strait return to around 14m b/d for oil supply from the Persian Gulf to return to pre-war levels,” ING analysts said in a note.
“We continue to believe that the oil sell-off is overdone, with the market still tightening. Clearly, price movements suggest the market expects a fairly rapid recovery in Persian Gulf oil supplies,” they added.
Investors also digested inventory figures released by the American Petroleum Institute (API). U.S. crude stockpiles fell by 765,000 barrels in the week ended June 19, a smaller drawdown than many analysts had anticipated.
Crude inventories at Cushing, Oklahoma, the delivery point for WTI contracts, declined by 1 million barrels. Meanwhile, gasoline stocks increased by 1.2 million barrels and distillate inventories rose by 1.4 million barrels.
Attention now turns to official supply data from the U.S. Energy Information Administration (EIA), due later on Wednesday, for confirmation of inventory trends.
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