Oil Falls, Hormuz Transit Signals Ease Supply Risk Premium
Oil prices weakened on Thursday after Iranian state media reported that around 30 vessels had passed through the Strait of Hormuz in recent hours, while the semi-official Fars news agency cited sources as saying Iran had begun allowing transit for some Chinese vessels. These developments eased market concerns that the key energy artery would remain completely blocked amid the Iran conflict.
Brent crude briefly touched US$107.13 per barrel before falling 60 cents, or 0.6%, to US$105.03 per barrel at 14:22 GMT. WTI crude fell 52 cents, or 0.5%, to US$100.50. The previous day, both contracts had also weakened due to market concerns about a possible US interest rate hike, as rising fuel prices risked intensifying inflationary pressures.
From a geopolitical perspective, the White House stated that US President Donald Trump and Chinese President Xi Jinping agreed that the Strait of Hormuz must remain open for the smooth flow of energy. According to the White House, Xi also expressed interest in purchasing more US oil to reduce China's dependence on Hormuz, although China reportedly hasn't imported US oil since May 2025 after 20% import tariffs were imposed in the trade war.
Despite signs of easing transit restrictions, supply risks remain high, as Hormuz has been "largely" closed since the war broke out in late February, and Iran is said to be tightening controls by forging oil and LNG shipping deals with Iraq and Pakistan. Shipping data shows several vessels successfully passing through, including a Chinese supertanker carrying 2 million barrels of Iraqi oil on Wednesday, and a Panama-flagged tanker operated by Eneos observed passing through on Thursday.
On the fundamental side, the IEA expects global oil supply to be in deficit against demand this year due to rapid inventory depletion. In the US, the EIA reported crude oil stocks fell 4.3 million barrels to 452.9 million barrels in the week ending May 8 amid rising exports, although distillate stocks rose, defying expectations for a decline.
Source: Newsmaker.id
