DUBAI — Oil prices fallen to levels before the US-Israel war on Iran as traffic through the Strait of Hormuz shipping route gradually resumes, raising expectations of supply from the Middle East outweighed demand concerns.
The price of Brent crude has reached its lowest since February 27, before the war started.
Prompt-month Brent crude futures for August delivery fell $1.06 (1.44 percent) to $72.68 a barrel by 06:39 GMT, while US West Texas Intermediate (WTI) lost 76 cents (1.08 percent) to $69.58 a barrel.
Global benchmark Brent crude briefly fell below $72.48 (£55) a barrel, the price it was at the day before the US and Israel launched attacks on Iran on 28 February, before edging up to $72.63.
Energy prices have been on a wild ride since Iran responded to the strikes by effectively closing the strait, a critical waterway for oil and gas shipments.
The cost of crude has been moving sharply lower since the US and Iran signed a Memorandum of Understanding (MOU) on 17 June which set out a 60-day period for negotiations on Tehran’s nuclear programme and other measures to end the war.
Representatives from the two sides met in Switzerland last weekend for talks to end the war, which resulted in the US partially lifting sanctions on Iranian oil exports.
Flows through the Strait of Hormuz were close to those before the start of the Iran war, with at least 20 million barrels having exited the strait in the past 24 hours, US Energy Secretary Chris Wright told an energy forum in Japan.
The number of vessels crossing the Strait of Hormuz has risen significantly since the MOU was signed, according to maritime intelligence firm Kpler.
The ships passing through the waterway in recent days include those carrying crude oil, liquefied natural gas (LNG), fertiliser and other goods, Kpler told the BBC.
The US and Iran had also formed a “communication line” to prevent misunderstandings “with the aim of safe passage for commercial vessels through the Strait of Hormuz”, mediators Qatar and Pakistan said in a joint statement on Monday.
There has been a “tremendous shift” with far more ships using the strait in recent days, said Dimitris Maniatis, the chief executive of Marisks, a maritime risk advisory firm working with ships stuck in the region.
His company estimates around 80 ships have crossed the Strait of Hormuz since Monday after the first round of peace talks between US and Iran in Switzerland.
A limited number of ships can cross a northern passageway with the permission of Iranian authorities, he said.
The US navy has also provided guidance for vessels to travel through a southern route that is safe from mines and other obstacles that has been laid out since the war, Maniatis said.
But the number of ships crossing the strait is still below levels seen before the war, when it was used by more than 100 ships a day.
Hundreds of ships still appear to be waiting in the Gulf.
Rising Middle East supply, together with Iran set to boost sales after a temporary reprieve from US sanctions, drove down prices of physical crude oil cargoes around the world.
Oman opened temporary routes on Wednesday to ease tanker departures from the strait, with the International Maritime Organization and Omani authorities coordinating movements.
On Thursday, Iran’s Revolutionary Guards warned against any crossings of the Strait of Hormuz without authorisation, saying vessels not complying “will be dealt with” and condemning the new routes.
Fuel prices at the pump rose sharply when the Iran war began, and now the focus is on how quickly they will fall.
The average price of regular gasoline in the US has dropped to around $3.93 a gallon after reaching $4 a gallon in April, its highest since 2022, but is still well above pre-war levels.
US President Donald Trump on Wednesday ordered an investigation into major energy companies, accusing Shell, ExxonMobil and other firms of “gouging” drivers by not reducing fuel prices even as oil costs fell.
“Oil prices have come down so much and we are not seeing anything at the pump by comparison the way they should be,” Trump told reporters in the Oval Office.
The American Petroleum Institute, which represents the oil and gas industry in the US, said fuel prices “don’t move in lockstep with crude oil”.
British energy firms have faced similar accusations of unfairly hiking petrol prices since the Iran war.
The UK competition watchdog said last month that there was no widespread evidence of this, adding that average profit margins were “broadly unchanged” between February and March.
Source: Saudi Gazette