Oil Falls as Hormuz Deal Improves Supply Outlook
Oil prices declined after the interim US-Iran peace deal took effect, shifting market focus to how quickly vessel traffic through the Strait of Hormuz can return to normal. The recovery of the waterway is critical as Persian Gulf producers prepare to restart output that had been shut in during the conflict.
Brent fell below $79 a barrel after a modest gain on Wednesday, while West Texas Intermediate traded near $76. US President Donald Trump said he had signed the agreement, which includes a rapid reopening of the strategic waterway.
Iran said US sanctions must be lifted immediately. Foreign Ministry spokesperson Esmail Baghaei said Tehran must be able to sell its oil, while shipping, insurance, and oil-revenue payments should not face restrictions.
Crude has now erased almost all of the gains recorded during the conflict. The war began in February after the US and Israel attacked Iran to curb its nuclear program. Tehran responded by blocking Hormuz, which normally carries about one-fifth of global oil supply, before the US also imposed a blockade on the route.
Ahead of the deal’s signing, the oil and shipping industry remained largely in wait-and-see mode. Still, some vessels began rerouting toward the Middle East, while Iranian tankers loaded with oil started to move out. Shipbrokers also reported early inquiries for vessels to collect oil from ports across the region.
The prospect of additional supply remains the main pressure on prices. Iraq, the region’s second-largest producer, has also said it is taking steps to increase exports. If Gulf oil flows recover, the market could face more supply in the near term.
Despite the price decline, inventory pressure has not disappeared. Stockpiles at Cushing, the largest US commercial storage hub, have fallen to about 20 million barrels, a level traders view as an operational minimum. This suggests the physical market remains tight even as forward supply expectations improve.
At 8:15 a.m. Singapore time, Brent for August settlement fell 1% to $78.75 a barrel, while WTI for July delivery dropped 1.2% to $75.86. Market focus now turns to the pace of Hormuz’s reopening, sanctions relief for Iranian exports, the shipping industry’s response, and US inventory data.
Source : Newsmaker.id
