BEIJING – Oil prices extended their decline on June 25, edging closer to pre-war levels as stranded tankers exited the Strait of Hormuz following an initial accord to end the US-Israeli war with Iran, easing supply concerns.
Prompt-month Brent crude futures for August delivery fell US$0.40, or 0.54 per cent, to US$73.34 a barrel, while U.S. West Texas Intermediate fell US$0.27, or 0.38 per cent, to US$70.07 a barrel.
August Brent was trading lower than September, which was priced at US$73.59, signalling ample short-term supply.
“The speed of this decline has caught plenty off guard as markets price in a much faster return of Middle Eastern barrels than most had anticipated just a fortnight ago,” IG analyst Tony Sycamore said in a note.
Brent had fallen more than US$3 on June 24 as supply concerns eased, and WTI settled down nearly US$3.
US Energy Secretary Chris Wright told a forum on June 24 that flows through the Strait of Hormuz were close to what they were before the start of the Iran war, saying at least 20 million barrels had exited the strait in the last 24 hours. He added a return to complete normalcy would take a few weeks because the strait needs to be demined.
An initial accord last week to end the US-Israeli war with Iran, which began on Feb 28, has allowed traffic through the strait to restart.
The accord set up a 60-day period of negotiations to tackle more difficult issues including Iran’s nuclear program. Wright said oil would continue to flow through the strait even if the deal did not hold, and that Iran would not be able to close it again.
Oman on June 24 opened temporary routes to ease tanker departures from the Strait of Hormuz, with the International Maritime Organisation and Omani authorities coordinating movements. Qatar’s prime minister visited Oman for talks on initiating negotiations over the strait’s future management with Iran, Iraq and Gulf states.
US total crude stocks hit their lowest since 1984 last week, the Energy Information Administration said on June 24, on strong refining demand and as the government released oil from its emergency reserve. Markets, however, appeared unfazed by the EIA data as traders focused on the Strait of Hormuz. REUTERS
Source : https://www.straitstimes.com/business/oil-prices-fall-as-tankers-exit-strait-of-hormuz
