Oil prices fall as supply outlook improves after Strait of Hormuz reopens

Global oil prices declined on June 19 as market sentiment improved on expectations of increased supply following the reopening of the Strait of Hormuz and a peace deal between the United States and Iran.

By 03:28 GMT, Brent crude futures fell 43 cents, or 0.54%, to $79.42 per barrel, while U.S. West Texas Intermediate (WTI) crude slipped 17 cents, or 0.22%, to $76.43 per barrel. The front-month July WTI contract is set to expire on June 22, while the more actively traded August contract fell 30 cents to $75.55 per barrel, Reuters reports. 

The easing in prices follows earlier losses on June 18, when both benchmark contracts touched their lowest levels since early March. The decline came as several oil tankers, including three Saudi-flagged vessels carrying around 6 million barrels of crude, reportedly transited the Strait of Hormuz shortly after a US–Iran interim agreement was reached.

The agreement is said to have eased tensions and allowed maritime traffic to resume through the strategic waterway, a key route for global oil shipments.

Analysts estimate that the deal could release more than 85 million barrels of oil previously held in storage in the Gulf region back into global markets. The arrangement is also expected to include the lifting of US sanctions on Iranian oil exports, potentially adding further supply to an already well-supplied market.

By Sabina Mammadli