Oil prices fall over 1% as Strait of Hormuz shipping improves

Oil prices fell more than 1% on June 24, extending recent losses and hovering near four-month lows amid signs that additional tankers stranded in the Gulf are beginning to move through the Strait of Hormuz.

Brent crude futures dropped 78 cents, or 1.0%, to $76.30 a barrel at 0350 GMT, while U.S. West Texas Intermediate (WTI) fell 78 cents, or 1.1%, to $72.43 a barrel. Both benchmarks had also declined around 1% in the previous session, reaching their lowest levels since early March, Reuters reports.

Analysts attributed the downward pressure to improving shipping conditions and expectations of steadier oil flows through the strategic waterway. ING commodity strategists said vessel crossings had increased in recent days, though they remained below pre-conflict levels.

“Positive signals from the Persian Gulf are fuelling optimism about oil flows through the Strait of Hormuz,” ING said, noting that while traffic is recovering, it has not yet returned to normal volumes.

Market sentiment was also weighed down by diplomatic developments, including a reported 60-day U.S. sanctions waiver for Tehran following initial peace discussions, allowing increased Iranian oil exports. Easing tensions in Lebanon have also contributed to softer risk premiums in energy markets.

“Crude oil prices were weighed down by hopes of easing U.S.-Iran tensions and a recovery in oil shipments through the Strait of Hormuz,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting. He added that further progress in nuclear negotiations could push prices back toward pre-conflict levels.

Diplomatic engagement over maritime security continued on June 23, when Oman and Iran agreed to pursue further talks on navigation management in the Strait of Hormuz. U.S. Secretary of State Marco Rubio warned that any attempt by Iran to impose transit fees would violate international law.

Despite the progress, uncertainty remains over the durability of recent understandings. Divergent statements from Washington and Tehran over the scope of nuclear discussions have underscored ongoing tensions.

Shipping data indicated some improvement in transit activity, with reports that several large tankers recently passed through the Strait. The United Nations maritime agency said an evacuation plan was being developed to allow hundreds of vessels and thousands of seafarers previously stranded in the Gulf to resume passage.

On the supply side, crude inventories fell by 765,000 barrels in the week ending June 19, according to data cited by market sources from the American Petroleum Institute. However, analysts surveyed by Reuters had expected a much larger decline of around 4.5 million barrels.

By Sabina Mammadli