Crude Oil Drops, WTI Drops Below $70
Oil prices fell by around 4% in trading on Wednesday (June 24th), as tanker movement through the Strait of Hormuz became smoother. This condition has increased market confidence that the worst phase of energy supply disruptions from the Middle East is beginning to pass. West Texas Intermediate (WTI) briefly fell to US$69.63 per barrel, marking the first time the contract price has fallen below US$70 since March 2nd.
Brent crude, the global benchmark, also weakened sharply. Brent prices fell 4.2% to around US$73.79 per barrel, their lowest level since before the United States and Israel launched airstrikes against Iran on February 28th. This decline indicates the market is beginning to unwind the war risk premium that had previously driven oil prices high during the conflict.
The main sentiment came from increased shipping activity in the Strait of Hormuz. Tankers have begun to return to open passage, signaling that confidence among shipowners and energy traders is recovering. If oil flows from the Persian Gulf continue to improve, concerns about global supply shortages could further ease, potentially leaving oil prices under pressure.
Amid falling crude oil prices, US President Donald Trump criticized oil companies for not reducing gasoline prices at the pump commensurately. Trump stated that oil prices have fallen sharply, but consumers haven't felt the reduction quickly enough at the pump. He even stated that he has asked the US Department of Justice to immediately investigate the possibility of "price gouging," or excessive profit-making.
Trump's statement adds to the political pressure on the US energy industry. On the one hand, falling oil prices should help ease inflation and ease consumer burdens. However, gasoline prices typically don't fall as quickly as crude oil prices due to other factors such as old stocks, refining costs, distribution, taxes, and retail margins.
Going forward, the market will monitor whether the decline in crude oil continues and begins to be felt in fuel prices. If Hormuz remains secure and Middle East supplies continue to recover, WTI could remain below US$70 or move towards the next support area. However, if new obstacles arise in US-Iran talks or shipping flows are disrupted again, oil prices still have the potential to rebound from low levels.
Source: Newsmaker.id
