Oil prices continued to fall on Thursday, moving closer to levels seen before the recent conflict in the Middle East, as shipping activity through the Strait of Hormuz picked up and concerns about supply disruptions eased.
Brent crude for August delivery dropped 40 cents, or 0.54 percent, to $73.34 a barrel in early trading. US West Texas Intermediate (WTI) crude fell 27 cents, or 0.38 percent, to $70.07 a barrel.
The latest decline follows a sharp sell-off earlier this week. Brent lost more than $3 on Wednesday, while WTI also closed nearly $3 lower as traders became more confident that oil supplies from the region would continue to flow.
A key factor behind the easing pressure is the gradual return of tanker traffic through the Strait of Hormuz, one of the world’s most important energy routes. The passage had faced disruption during the conflict involving the US, Israel and Iran, raising fears of supply shortages and pushing oil prices higher.
Those concerns have now started to fade after an initial agreement was reached last week to halt hostilities and open the door for negotiations.
Market analyst Tony Sycamore of IG said the speed of the decline had surprised many investors, as traders are now expecting Middle Eastern oil supplies to recover much faster than previously thought.
Another sign of improving supply conditions came from the Brent futures market. August Brent crude was trading below the September contract, a pricing pattern that often points to comfortable short-term supply availability.
Hormuz flows recover
US Energy Secretary Chris Wright said on Wednesday that oil flows through the Strait of Hormuz were approaching levels seen before the conflict began. According to Wright, at least 20 million barrels passed through the waterway over the past 24 hours.
He noted that a full return to normal operations could still take several weeks because parts of the area need to be cleared of mines.
The ceasefire arrangement has created a 60-day window for talks on more complex issues, including Iran’s nuclear programme. Wright said oil shipments would likely continue through the strait even if negotiations face difficulties, adding that Iran would not be able to shut down the route again.
Efforts to restore confidence in shipping have also gained support from regional governments. Oman has opened temporary routes to help tankers leave the strait more smoothly, while international maritime authorities are coordinating vessel movements. Qatar has also begun discussions with regional partners on the future management of the vital waterway.
Meanwhile, US government data showed crude oil inventories fell to their lowest level since 1984 last week due to strong refinery demand and releases from emergency reserves. However, traders largely ignored the inventory figures, keeping their attention on developments in the Strait of Hormuz and the improving supply outlook.
