Markets breathe easier as oil slides on Strait of Hormuz reopening hopes

Oil prices declined on June 4 amid a ceasefire agreement between Israel and Lebanon, which strengthened expectations of a broader settlement involving the US and Iran, as well as the potential reopening of the Strait of Hormuz, Reuters reports.

Brent crude futures fell 0.89% to $96.92 per barrel as of 08:58 Baku time. US West Texas Intermediate (WTI) crude dropped 0.81% to $95.24 per barrel, partially reversing gains from previous sessions.

Both benchmark grades rose about 2% the previous day following renewed tensions in the Middle East, including Iranian strikes on targets in Kuwait and US strikes near the Strait of Hormuz.

Late on Wednesday, June 3, Israel and Lebanon announced a ceasefire agreement, boosting hopes for progress in negotiations between Washington and Tehran. US President Donald Trump said progress in dialogue with Iran could be possible as early as the coming weekend.

Iranian Foreign Minister Abbas Araghchi noted that contacts with the United States are ongoing, but no significant progress has been made so far.

Meanwhile, the US House of Representatives approved a resolution opposing the continuation of the war with Iran. The measure still requires Senate approval and could face a presidential veto.

The International Energy Agency warned on June 2 that global oil inventories could fall to critical levels ahead of peak summer demand if stock draws continue at the current pace, even as Chinese crude imports dropped by 6 million barrels per day in May compared with March.

By Jeyhun Aghazada