Oil prices decline
Global oil prices have fallen to pre-war levels as concerns over months-long conflicts in the Middle East ease and shipments through the Strait of Hormuz pick up pace again.
Brent crude futures, which rose to $76.76 per barrel the previous day, closed the day at $73.87. As of 12:06 today, Brent crude was down approximately 1.4% from the close, trading at $72.83 per barrel. At the same time, West Texas Intermediate (WTI) crude was trading at $69.19 per barrel.
Approaching pre-war closing levels
Brent crude had closed at $72.48 per barrel on the last trading day before the US/Israel-Iran War began on February 28. The current level is just 35 cents above that close.
Brent crude, which accelerated its rise during a period of heightened concerns over the impact of the war on energy supply, recorded its highest close at $118.35 per barrel on March 31.
Threats by U.S. President Donald Trump to target Iran's Kharg Island, power plants, and oil wells in the Persian Gulf if an agreement was not reached were a factor in prices reaching their peak.
Traffic in the Strait of Hormuz increases
Brent crude, which rose above $100 amid fears of supply disruptions during the intense period of fighting, has seen a sharp decline in recent weeks as concerns over a possible closure of the Strait of Hormuz have eased. Prices, which were around $97 in early June, have largely given back their war-era gains with an accelerated decline since mid-month.
In the markets, the resumption of tanker traffic through the strait and the normalization of oil flow in the region have reduced concerns about supply security, while investors have pulled back the geopolitical risk premium they had factored into prices.
U.S. Energy Secretary Chris Wright stated at the Reuters Global Energy Forum that approximately 72 ships and 20 million barrels of oil passed through the Strait of Hormuz in the last 24 hours.
What do analysts say?
Analysts point to the reduced risk of supply disruptions, expectations that more Iranian oil could return to global markets, and the easing of war-related uncertainties as the main reasons for the recent decline in the oil market.
Experts note that despite the price drop, the market remains sensitive to geopolitical developments. They indicate that a renewed disruption of flow through the Strait of Hormuz or a potential breakdown in the diplomatic process could cause new fluctuations in oil prices.
Technically, for Brent crude, $71.95 is seen as a support level, while $73.87 is monitored as a resistance zone.
