Oil prices continued to move lower on Wednesday, marking a third straight day of declines as improving traffic through the Strait of Hormuz and signs of progress in U.S.-Iran diplomacy reduced concerns over sustained disruptions to energy supplies from the Middle East.
At 05:39 ET (09:39 GMT), Brent Oil Futures for August delivery were down 2% at $75.52 per barrel, while West Texas Intermediate (WTI) crude futures declined 1.8% to $71.89 per barrel.
Both crude benchmarks finished the previous session near their lowest levels in four months.
Investor sentiment was influenced by indications that shipping volumes through the Strait of Hormuz are gradually returning to normal after months of conflict disrupted one of the world’s most critical energy transit routes.
Recent reports indicated that several supertankers previously delayed in the Gulf have now departed carrying crude cargoes. In addition, an increasing number of liquefied natural gas vessels linked to Qatar have resumed passage through the strait.
Traders view these developments as early evidence that regional energy exports are beginning to normalize.
Negotiators from the United States and Iran have agreed on a 60-day framework designed to work toward a broader agreement, while the U.S. has introduced a temporary sanctions exemption allowing selected Iranian oil exports to continue through August.
These measures have strengthened expectations that additional oil supplies could return to the global market.
“Estimates suggest that roughly 6-7m b/d of oil moved through the strait in recent days, which is still far below pre-war flows of around 20m b/d. However, with pipeline diversions for Saudi Arabia and the UAE, we only need to see oil flows through the strait return to around 14m b/d for oil supply from the Persian Gulf to return to pre-war levels,” ING analysts said in a note.
“We continue to believe that the oil sell-off is overdone, with the market still tightening. Clearly, price movements suggest the market expects a fairly rapid recovery in Persian Gulf oil supplies,” they added.
Market participants also reviewed weekly inventory figures released by the American Petroleum Institute (API). U.S. crude stockpiles fell by 765,000 barrels during the week ended June 19, a smaller decline than analysts had anticipated.
Inventories at Cushing, the delivery point for WTI crude, decreased by 1 million barrels. Meanwhile, gasoline inventories rose by 1.2 million barrels and distillate fuel stocks increased by 1.4 million barrels.
Investors are now awaiting official inventory data from the U.S. Energy Information Administration (EIA), scheduled for release later on Wednesday, for further confirmation of supply trends.