“Oil falls more than 4% and hits lowest level since the start of the war”

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The global benchmark price for oil fell more than 4% this Wednesday and closed at its lowest level since before the start of the war between the United States, Israel, and Iran, driven by signs of recovery in maritime traffic in the Strait of Hormuz after weeks of blockade.

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Brent crude futures closed down USD 3.34, or 4.3%, at USD 73.74 a barrel on London’s Intercontinental Exchange (ICE). The U.S. West Texas Intermediate (WTI) fell USD 2.87, or 3.9%, to close at USD 70.34 a barrel, briefly touching the USD 70 threshold during the session before recovering.

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Brent hit an intraday low of USD 73.12, its lowest price since February 27, the eve of the US and Israeli attacks on Iran. WTI also recorded its lowest level since March 2, when the conflict began to push global energy markets higher, reaching nearly USD 120 per barrel during moments of peak tension.

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The United States Secretary of Energy, Chris Wright, stated during his speech at the Reuters Global Energy Forum held in New York that crude oil flows through the Strait of Hormuz are similar to those recorded before the start of the conflict. He specified that around 20 million barrels left the strait in the last 24 hours, with the assistance of military escorts.

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Wright warned that the return to full navigation has been delayed by the presence of Iranian mines placed in the strait, although he assured that Iran will not have the capacity to block it in the future and that Washington will guarantee the flows even in the absence of a definitive agreement with Tehran.

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The maritime monitoring platform Kpler recorded about 31 vessel crossings per day since both powers reopened the passage, a figure that remains well below the average of 100 to 120 ships per day that transited the strait before the conflict, according to data from the same source.

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Three oil tankers that had been stranded and were collectively carrying 5 million barrels of crude oil left the strait on Wednesday, two of them bound for Asia, according to shipping data. The movement comes under the provisional agreement between Iran and the United States, which has allowed for the release of supplies held in the Gulf.

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Oman announced that it would keep the strait open to navigation without imposing tolls and that it had designated two temporary routes, to the north and south of the existing waterway, to facilitate the safe passage of vessels leaving the region. The International Maritime Organization (IMO) activated a plan for the evacuation of the approximately 11,000 sailors stranded in the strait and issued instructions for vessels to remain in their current position awaiting further guidance before resuming navigation.

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Three oil tankers that remained stranded and were collectively transporting 5 million barrels of crude oil left the strait on Wednesday.

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The blockade left nearly 20,000 crew members on board 2,000 ships in a vulnerable situation. Physical crude cargoes were sold at discounts worldwide, altering trade flows under pressure from the rapid increase in supply from the Middle East.

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Iran is preparing to boost its sales after obtaining a temporary reprieve from U.S. sanctions, authorized by Washington this week as part of negotiations toward a definitive peace agreement in exchange for commitments on nuclear inspections and free transit through Hormuz. Brent prices for second-month delivery were trading above those for immediate delivery for the first time since the start of the war, a technical signal that markets interpret as an increase in short-term supply.

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“Positive signals from the Persian Gulf are fueling optimism about oil flows through the Strait of Hormuz”, wrote ING analysts in a note, although they specified that vessel crossings “remain well below pre-war levels”.

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United States President Donald Trump criticized this Wednesday that the drop in crude oil prices has not yet been passed on to the cost of gasoline for citizens and ordered the Department of Justice to investigate “the big oil companies.” Analysts pointed out that it is usual for some time to pass before consumers perceive the price reduction at the pumps, and alluded to the political weight of affordability ahead of the midterm elections in the United States.

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Trump also warned Iran that he will suspend peace negotiations if Tehran charges tolls in the strait, although in a later statement he assured that the Iranian government “is behaving very well” in the process.

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