Oil Prices Return to Pre-Iran War Levels
Oil prices traded near levels last seen before the start of the Iran war, as expectations of rising supply from the Middle East continued to pressure the market. Concerns over global demand remain, but traders are currently more focused on the potential return of additional oil supply from the Gulf region.
Brent crude futures for August delivery fell 25 cents, or 0.34%, to US$73.49 per barrel by 13:27 GMT. Meanwhile, U.S. West Texas Intermediate, or WTI, declined 24 cents, or 0.34%, to US$70.10 per barrel.
Both contracts earlier touched their lowest levels since February 27, a day before the launch of U.S.-Israeli strikes on Iran. The decline suggests that the war-risk premium that had previously lifted oil prices is beginning to fade from the market.
Signs of ample short-term supply were also reflected in Brent’s price structure. August Brent was trading below the September contract, which stood at US$73.83. This condition indicates that the market sees sufficient near-term oil availability.
Rystad Energy analyst Janiv Shah said the backlog of vessels in the Persian Gulf is being cleared, creating a fresh wave of supply to the market. He also pointed to signs that production assets and oil terminals could restart operations soon.
U.S. Energy Secretary Chris Wright said oil flows through the Strait of Hormuz were already close to pre-war levels. He noted that at least 20 million barrels of oil had exited the strait in the last 24 hours. However, a full normalization process is expected to take several weeks, as the waterway still needs to be cleared of mines.
UBS analyst Giovanni Staunovo said most of the increase in Gulf oil flows is currently outbound, with ships exiting the Strait of Hormuz. However, a significant increase in inbound flows will require shipping confidence to recover, including safety guarantees and mine clearance, so that insurance premiums can return to normal.
With these conditions, the oil market may remain under pressure as Middle East supply continues to recover and the risk of disruption in the Strait of Hormuz eases. However, if the normalization process faces delays or fresh geopolitical tensions emerge, oil prices could still return to volatile movements.
Source : Newsmaker.id
