Global oil prices extended their decline on Wednesday, falling more than 1 percent and hovering near four-month lows as signs of improving shipping activity in the Strait of Hormuz eased fears of supply disruptions.
Brent crude futures dropped 78 cents, or 1 percent, to $76.30 a barrel by 0350 GMT, while US West Texas Intermediate (WTI) crude fell 78 cents, or 1.1 percent, to $72.43 a barrel.
The latest losses came after both benchmarks closed around 1 percent lower on Tuesday, reaching their weakest levels since early March.
Markets have been reacting to growing indications that oil exports through the strategically important Strait of Hormuz could return to normal following recent tensions in the region. The narrow waterway is one of the world’s most important routes for global energy supplies.
Analysts at ING said increased vessel traffic through the strait has helped improve market confidence, even though shipping activity remains below levels seen before the conflict.
The downward pressure on prices has also been linked to diplomatic progress between Washington and Tehran. Earlier this week, the US granted Iran a 60-day sanctions waiver following initial peace discussions, allowing the country to continue selling oil in international markets.
Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting, said hopes for easing tensions between the US and Iran, along with recovering oil shipments through the Strait of Hormuz, have weighed on crude prices.
He noted that further progress in nuclear negotiations could push oil prices back to levels seen before the recent regional conflict.
On Tuesday, Iran and Oman agreed to continue talks regarding the future administration of navigation through the strait. Meanwhile, US Secretary of State Marco Rubio warned that any Iranian attempt to impose transit fees on vessels would be against international law.
Uncertainty remains despite progress
Despite improving sentiment, questions remain over how long the current diplomatic momentum will last.
US President Donald Trump said Iran had agreed to allow nuclear inspections indefinitely. However, Iranian officials denied making such a commitment during negotiations, highlighting continuing differences between the two sides.
Investors are also closely watching the pace at which Middle Eastern producers can restore exports and whether more ships return to the region.
An Iranian military source told Fars news agency that only a limited number of vessels are currently being permitted to pass through the strait each day under coordination with Iran’s Revolutionary Guards Navy.
Ship-tracking data showed that three stranded supertankers successfully crossed the waterway on Tuesday. The United Nations shipping agency has also begun implementing plans to help hundreds of vessels and around 11,000 seafarers stranded in the Gulf resume their journeys following the US-Iran ceasefire agreement.
Meanwhile, US crude inventories offered some support to the market. Data from the American Petroleum Institute showed crude stockpiles fell by 765,000 barrels in the week ended June 19.
However, that decline was smaller than market expectations. Analysts surveyed by Reuters had forecast an average drop of about 4.5 million barrels, suggesting oil demand may not have been as strong as anticipated.
