PERTH: Global oil prices declined on Friday as concerns over supply disruptions eased following the resumption of tanker traffic through the Strait of Hormuz after the signing of a U.S.-Iran interim peace agreement.
Brent crude futures fell by 54 cents, or 0.68%, to $78.31 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 46 cents, or 0.60%, to $76.14 per barrel by 0146 GMT. The more actively traded August WTI contract was down 79 cents at $75.06 per barrel.
Both benchmark contracts touched their lowest levels since early March during Thursday’s trading after several oil tankers successfully navigated the Strait of Hormuz. Among them were three Saudi-flagged vessels carrying a combined 6 million barrels of crude oil. The shipments resumed only hours after U.S. President Donald Trump signed an agreement with Iran aimed at ending hostilities between the two countries.
Market analysts believe the peace deal could unlock more than 85 million barrels of oil previously stranded in the Gulf region, significantly increasing global supply. The agreement also includes the removal of U.S. sanctions on Iranian oil exports, further boosting expectations of additional barrels entering the market.
“Traders are still waiting for clear evidence that tanker traffic through the Strait of Hormuz is returning to normal before positioning for another major decline in prices,” said Tim Waterer, Chief Market Analyst at KCM Trade.
“Until vessel movements become consistently smooth, some uncertainty remains and continues to limit further downside in the market,” he added.
Before the conflict, nearly 20% of global oil and liquefied natural gas (LNG) supplies passed through the Strait of Hormuz, making it one of the world’s most critical energy chokepoints. Analysts believe trade flows could fully normalize over the coming months if the U.S.-Iran agreement remains in place.
Meanwhile, Middle Eastern oil producers are preparing to ramp up exports. Kuwait Petroleum Corporation announced on Thursday that all force majeure notices issued during the conflict have been lifted with immediate effect, signaling a return to normal operations and further reinforcing expectations of increased global oil supply.
The easing of geopolitical tensions and the prospect of additional crude entering international markets have weighed heavily on prices, with investors closely monitoring shipping activity and export levels across the Gulf region.
By Reuters
