LONDON: Global crude oil prices fell by more than one percent on Wednesday, reaching their lowest level in the past four months amid easing concerns over supply disruptions.
The decline is largely attributed to increasing prospects that more oil tankers stranded in the Persian Gulf will be able to pass through the Strait of Hormuz, reducing fears about supply constraints.
Brent crude dropped by 78 cents, or 1 percent, to $76.30 per barrel, while US West Texas Intermediate (WTI) crude fell by 78 cents, or 1.1 percent, to $72.43 per barrel. Both benchmarks had also closed about 1 percent lower on Tuesday, marking their weakest levels since early March.
Experts say positive signals from the Persian Gulf have boosted investor confidence that oil shipments through the Strait of Hormuz will gradually return to normal. Although shipping activity has increased in recent days, it still remains below pre-conflict levels.
Another factor putting pressure on prices is the United States easing sanctions on Iran for 60 days, allowing Tehran to resume oil exports. Additionally, reduced tensions in Lebanon have helped calm market concerns.
According to senior economist Tomomichi Akuta of Mitsubishi UFJ Research and Consulting, expectations of improved US-Iran relations and the restoration of oil supply routes have pushed crude prices lower. He added that further progress in nuclear negotiations could bring prices back to pre-war levels.
Meanwhile, Oman and Iran have agreed to continue talks on shipping arrangements in the Strait of Hormuz. US Secretary of State Marco Rubio warned that any attempt by Iran to impose transit fees on vessels would violate international law.
Despite the recent developments, uncertainty remains regarding the future of ceasefire agreements and negotiations. Former US President Donald Trump claimed Iran had agreed to permanent nuclear inspections, a statement denied by Tehran.
Shipping data shows that three major supertankers successfully passed through the Strait of Hormuz on Tuesday.
The United Nations maritime agency also reported that evacuation plans are underway to ensure safe passage for around 11,000 sailors and hundreds of vessels stranded in the Gulf following the ceasefire.
According to the American Petroleum Institute (API), US crude oil inventories fell by 765,000 barrels in the week ending June 19, compared to analysts’ expectations of a 4.5 million barrel decline.
