Global oil prices declined on Thursday, returning to levels seen before the outbreak of the Iran conflict, as traders focused on recovering supply flows from the Middle East rather than demand-related risks.
Brent crude futures for August delivery dropped by $1.28, or 1.74%, to $72.46 per barrel, while US West Texas Intermediate crude fell $1.15, or 1.63%, to trade at $69.19 per barrel during morning trading.
The decline came as energy markets responded to signs that oil shipments through the strategically important Strait of Hormuz have largely recovered. US Energy Secretary Chris Wright said export volumes moving through the waterway were approaching normal levels, with more than 20 million barrels transported over the previous 24 hours.
Wright noted that while traffic has improved significantly, a full return to normal operations may still take several weeks as efforts continue to clear mines and restore complete navigational confidence in the area.
Market analysts said most of the recent increase in activity has involved tankers leaving the Gulf, while incoming traffic remains below normal due to ongoing safety concerns. Shipping firms and insurers are expected to remain cautious until security conditions improve further and insurance costs stabilize.
Additional pressure on prices came from expectations that crude supplies from the region will continue to grow. Iran is also anticipated to increase oil exports following a temporary easing of US sanctions, contributing to a softer outlook for global crude markets.
Despite that expectation, analysts at Goldman Sachs said they do not foresee a substantial rise in Iranian oil production, even if sanctions relief remains in place beyond its current August deadline.
The bank added that China is expected to remain the primary destination for Iranian crude, as restrictions imposed by European and British authorities on Iranian oil shipments and vessels continue to limit broader market access.
Last week’s agreement ending hostilities between the United States, Israel and Iran has helped restore confidence in the region and allowed commercial shipping to resume more freely through the Strait of Hormuz.
The deal also established a 60-day negotiating period aimed at addressing more complex issues, including Iran’s nuclear activities. Wright expressed confidence that oil shipments through the waterway would continue even if diplomatic talks encounter setbacks.
In a further effort to ease congestion, Oman introduced temporary shipping routes on Wednesday, working alongside international maritime authorities to facilitate tanker movements through the region.
Separately, uncertainty surrounding oil production quotas within OPEC resurfaced after a senior Iraqi oil ministry official indicated that Baghdad may explore alternative options if its production allocation is not significantly increased.
The remarks have renewed attention on Iraq’s future role within the producer group, particularly following the United Arab Emirates’ departure earlier this year. Iraq remains one of OPEC’s founding members and has historically played a central role within the organization.
Goodness Anunobi
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