Oil Prices Extend Losses Amid Signs of Hormuz Traffic Recovery
Oil prices continued to decline on Wednesday, marking a third consecutive session of losses. Brent August futures slipped 0.8% to $76.46 per barrel, while West Texas Intermediate (WTI) contracts fell 0.8% to $72.65 per barrel. Both benchmarks had settled near four‑month lows in the prior session.
Market sentiment was influenced by evidence that shipping activity through the Strait of Hormuz is gradually normalising after a months‑long conflict that had disrupted one of the world’s key energy chokepoints. Reports indicated that several previously stranded super‑tankers have successfully exited the Gulf carrying crude cargoes, and a growing number of Qatar‑linked liquefied natural gas vessels have resumed voyages through the waterway. Traders view these movements as an early indication of regional energy flow normalisation.
U.S. and Iranian negotiators have agreed to a 60‑day roadmap aimed at reaching a broader settlement, and Washington has granted a temporary sanctions waiver that permits certain Iranian oil exports to resume through August. These diplomatic steps have heightened expectations that additional crude supplies will return to global markets.
According to ING analysts, roughly 6‑7 million barrels per day (b/d) of oil have moved through the strait in recent days, which remains far below the pre‑war flow level of around 20 million b/d. However, because of pipeline diversions for Saudi Arabia and the UAE, a flow of about 14 million b/d through the strait would be sufficient to restore Persian Gulf oil supply to pre‑war levels. The analysts added that they continue to believe the recent oil sell‑off is overdone and that the market is tightening, suggesting expectations of a fairly rapid recovery in Persian Gulf oil supplies.
Investors also examined U.S. inventory data released by the American Petroleum Institute (API). Crude inventories declined by 765,000 barrels in the week ended 19 June, a draw that was smaller than analysts’ expectations for a larger decline. At the WTI delivery hub in Cushing, crude stocks fell by 1 million barrels, while gasoline inventories rose by 1.2 million barrels and distillate fuel oil stocks increased by 1.4 million barrels. Traders are awaiting the official inventory figures from the U.S. Energy Information Administration (EIA) later on Wednesday for confirmation.