Oil held declines as more tankers openly cross the Strait of Hormuz, with the US and Iran making progress toward ending the war.
West Texas Intermediate traded near US$73 a barrel after falling less than 1 per cent in the previous session. Brent crude closed above US$77.
Vessels are transiting the strait with their satellite signals switched on, signalling growing confidence by shipowners, while the International Maritime Organization said it had received safety guarantees allowing hundreds of ships to exit the Persian Gulf.
The US and Iran have both flagged early progress in discussions to end the war that started in late February, although further talks are likely to be protracted and differing claims have emerged.
The Islamic Republic and Oman said they were beginning work on a pact for the administration of Hormuz, including the cost of managing transit, with concerns that Tehran will levy a fee.
“I think the market has been waiting for the last of the hopeful bulls to give in and we’re finding a bottom close to US$75,” said Carl Larry, an oil and gas analyst at Enverus.
“There’s a lot of questions ahead: replacing supply, wait time for loadings, China back on the buy side.”
The Republican-led Senate voted on June 23 to end the US war with Iran, in a rare symbolic rebuke of President Donald Trump. While the resolution is unlikely to force any changes in the administration’s strategy, it represents the latest sign that the President lacks domestic support for the effort.
Oil futures have come off by over a third since their wartime highs, helped by expectations of an impending wave of crude. The US has temporarily allowed for the purchase of Iranian oil as part of the process, aiding a push by sellers of such supplies in wooing Asia’s biggest refiners.
Still, there are signs of tightness in some markets including the US. The American Petroleum Institute reported crude inventories at the key storage hub of Cushing, Oklahoma, fell by a further 1 million barrels last week, according to a document seen by Bloomberg.
If confirmed by official data later on June 24, that would mean stockpiles have dropped below the 20-million-barrel mark that is generally seen as the minimum operating level. BLOOMBERG
