Oil Holds Near Three-Month Low as US-Iran Deal Expected to Boost Supply
Oil prices remained near a three-month low today amid expectations that a temporary US-Iran deal to reopen the Strait of Hormuz will increase global supply.
Brent traded above $79 per barrel after falling about 15% over the past four days, marking the longest losing streak this year, while West Texas Intermediate (WTI) hovered around $76 per barrel. The interim agreement, scheduled to be signed on Friday, offers Tehran broad financial incentives, including the immediate right to sell its oil.
Despite preparations for the signing, energy market participants remain skeptical about how quickly the Strait of Hormuz can resume normal operations. Crude prices have dropped sharply in recent weeks as prospects for ending the conflict between Washington and Tehran are seen easing global supply tightness. Producers, shippers, and traders are now evaluating whether the agreement will be durable and how long it will take for vessels to transit the strategic chokepoint.
“Most traders expect US naval operations to escort vessels during the first few weeks, and mine-sweeping ships will also be present, which will slow traffic flow,” said Dennis Kissler, Senior Vice President at BOK Financial Securities Inc.
The 14-point draft agreement outlines Tehran’s responsibility to ensure the movement of commercial ships and the US commitment to lift its blockade of Hormuz. The strait connects the Persian Gulf to the Indian Ocean and historically carried about a fifth of global oil supplies.
Brent for August delivery remained stable at $79.08 per barrel at 10:20 a.m. Singapore time, while WTI for July added 0.2% to $76.21 per barrel. The decline in crude has also pushed energy product prices lower, easing inflationary pressure on consumers. In the US, the nationwide average gasoline price fell toward $4 per gallon after peaking above $4.56 in May.
Although supply is expected to increase, US crude inventories continue to draw rapidly. Industry data showed a drop of about 8.3 million barrels last week, including a significant decline at the Cushing, Oklahoma hub. Official inventory data are scheduled for release on Wednesday.
Source : Newsmaker.id
