Oil Falls for Third Straight Session
Oil prices fell sharply again on Wednesday (June 24), extending their decline for the third consecutive session. Brent fell around 4% to US$73.71 per barrel, while West Texas Intermediate (WTI) fell 4.4% to US$69.98 per barrel. WTI's drop below US$70 caught the market's attention as it was its lowest level since early March.
The main pressure came from signs that the Strait of Hormuz was gradually reopening. Shipping activity in this vital energy route was beginning to recover after months of conflict disrupted oil and gas flows from the Persian Gulf region. Several previously stalled supertankers were reportedly able to leave the Gulf carrying crude oil, while LNG vessels connected to Qatar also began sailing through the route again.
The market interpreted the increased shipping activity as an early sign that regional energy flows were beginning to normalize. This sentiment was reinforced by improvements in relations between the United States and Iran. The two countries reportedly agreed on a 60-day roadmap toward a broader settlement, while Washington granted a temporary sanctions waiver that would allow some Iranian oil exports to resume until August.
The hope of additional Iranian supply has led the market to abandon the war risk premium that previously supported oil prices. If Iranian exports continue to recover and the Hormuz Passage remains secure, global supply could potentially increase. This situation discourages buyers from rushing to pay high prices as they did when the risk of supply disruptions remained high.
On the supply side, data from the American Petroleum Institute showed that US crude oil stocks fell by 765,000 barrels in the week ending June 19. This decrease was smaller than analysts' expectations, which had expected a larger decline. At the WTI delivery hub, Cushing, stocks fell by around 1 million barrels. However, gasoline stocks rose by 1.2 million barrels and distillate stocks increased by 1.4 million barrels, signaling that demand for energy products is not yet fully strong.
Going forward, the market will await official data from the Energy Information Administration to confirm the direction of US oil inventories. If official data shows no significant decline in stocks and the Hormuz Passage continues to improve, pressure on oil prices could continue. However, if Cushing stockpiles tighten further or US-Iran talks hit another snag, oil prices still have a chance to rebound from the lows. (arl)
Source: Newsmaker.id
