Oil Extends Slide on Expectations of Smoother Crude Flows via Hormuz

Oil prices extended their decline on Wednesday, extending this week’s losses and trading near four-month lows, as signs emerged that more oil tankers stranded in the Gulf are poised to exit the Strait of Hormuz.

Brent crude futures fell 78 cents, or 1.0%, to $76.30 a barrel as of 0350 GMT, while U.S. West Texas Intermediate crude slipped 78 cents, or 1.1%, to $72.43 a barrel. Both benchmarks settled down around 1% on Tuesday, touching their lowest levels since early March.

The price decline was driven by growing optimism about oil flows through the strategic Strait of Hormuz, a vital chokepoint for global oil shipments. “Positive signals from the Persian Gulf are fuelling optimism about oil flows through the Strait of Hormuz. Vessel crossings increased in recent days, although they remain well below pre-war levels,” said commodity strategists at ING in a note on Wednesday.

Prices have also been pressured this week after the United States granted Iran a 60-day sanctions waiver following initial peace talks, allowing Tehran to sell oil, and as hostilities in Lebanon eased. “Crude oil prices were weighed down by hopes of easing U.S.-Iran tensions and a recovery in oil shipments through the Strait of Hormuz,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting.

“Further progress in nuclear negotiations could push prices back to pre-war levels,” he added.

On Tuesday, Oman and Iran agreed to continue discussions on the future administration of navigation in the Strait of Hormuz. U.S. Secretary of State Marco Rubio stated that any Iranian attempt to impose transit fees would violate international law.

Despite these developments, uncertainty remains over the durability of the agreement. U.S. President Donald Trump claimed on Tuesday that Iran had agreed to nuclear inspections “into infinity,” while Tehran said it had made no such concession in negotiations.

Investors are also monitoring how quickly Middle Eastern producers can restore exports and whether more vessels will enter the region. An Iranian military source told Fars news agency that a limited number of vessels are being allowed to pass through the strait each day under coordination with Iran’s Revolutionary Guards Navy.

Ship-tracking data showed that three stranded supertankers passed through the strait on Tuesday. The United Nations shipping agency said an evacuation plan to enable hundreds of ships with 11,000 seafarers stranded in the Gulf to sail through the strait is underway following the U.S.-Iran ceasefire deal (see related report).

Meanwhile, crude stocks fell by 765,000 barrels in the week ended June 19, according to market sources citing data from the American Petroleum Institute released on Tuesday. Nine analysts polled by Reuters estimated, on average, that crude inventories decreased by about 4.5 million barrels in the past week.

The decline in oil prices comes amid a broader context of easing geopolitical tensions in the Middle East, which has eased fears of supply disruptions. The Strait of Hormuz, through which about a fifth of the world’s oil passes, has been a focal point of tension amid U.S.-Iran confrontations.

The recent diplomatic engagement, including the Oman-mediated talks and the U.S. sanctions waiver, has raised hopes for a de-escalation that could restore normal shipping flows. However, the skepticism expressed by both sides underscores the fragility of any potential agreement.

Market analysts note that the oil market remains sensitive to any developments in the U.S.-Iran relationship, with prices likely to remain volatile until a durable resolution is reached. The current situation highlights the interconnectedness of geopolitics and energy markets, where diplomatic progress can swiftly influence commodity prices.

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