(RTTNews) – Extending the losses from previous three sessions, crude oil prices have plummeted on Wednesday as shipping traffic picks up across the Strait of Hormuz after its reopening following last week’s U.S.-Iran Memorandum of Understanding.
WTI Crude Oil for August month delivery was last seen trading down by $2.87 (or 3.92%) at $70.34 per barrel.
Last Wednesday, the U.S. and Iran signed a Memorandum of Understanding to extend the already-agreed ceasefire for a period of 60 days and to discuss all contentious issues during this interval.
As a first step, Iran reopened the Strait of Hormuz which it had closed since the beginning of the U.S.-Iran war on February 28.
The U.S. Treasury also issued a license to Iran allowing the sale of Iranian crude oil, petrochemicals, and other products until August 21.
Since the central route is still mined and hence closed, vessels are either using northern route through Iranian waters or southern route through Omani waters. Ships are transiting through Iran-prescribed route. As part of the provisional U.S.-Iran framework, Iran is supposed to commence de-mining work within 30 days.
Trump today reiterated through Truth Social that Iran has agreed not to collect tolls or fees of any kind for ships passing through the Strait of Hormuz and added that negotiations could not have happened if Iran intended to extract charges in any form.
On Saturday, Iran’s Islamic Revolutionary Guards Corps announced closing the strait in response to Israeli strikes on Lebanon. Displeased by this, Trump warned Iran that if it attempted to do so there would not be a country as Iran.
On Tuesday, Iran’s Ambassador to U.N. in Geneva Ali Bahreini stated that the strait was open.
Later, Trump announced that a record 19 million barrels of oil flowed out of Hormuz Strait yesterday.
Traders are growing increasingly optimistic on complete normalization of oil and energy supply from Arab nations in the next few weeks.
According to new data from maritime intelligence company, Kpler, 131 ships traveled through the strait between Friday and Monday including 39 crossings on Monday.
According to BBC Verify, nearly 200 tankers are waiting across the strait as of Tuesday with nearly 10 ships moving west into the gulf.
Nearly 130 vessels made it through the strait before the conflict began on February 28.
From the nearly $120-per-barrel high reached during the peak of the U.S.-Israel versus Iran war, crude oil prices have now retreated more than around 35%.
On the inventory front, data from the American Petroleum Institute revealed that U.S. crude oil inventories fell by 765,000 barrels over the week ending June 19 following a 8,330,000-barrel draw in the previous week.
According to the U.S. Energy Information Administration, for the week ending June 19, crude oil inventories in the U.S. fell by 6,088,000 barrels to 412,000 barrels. At the Cushing, Oklahoma delivery hub, inventories dropped by 1,077,000 barrels.
For the same period, gasoline inventories increased by 2,064,000 barrels following a 906,000 barrels drop of the previous week, distillate inventories increased to 3,064,000 barrels from 951,000 barrels of the previous week, and heating oil inventories increased by 722,000 barrels following a 204,000-barrel slump of the previous week.
The U.S. dollar index was last seen trading at 101.64, up by 0.25 (or 0.25%) today.
Experts predict that along with Iran’s exports, additional crude oil may return to markets in the coming months with rising output from members of the Organization of Petroleum Exporting Countries leading possibly to an oversupply situation in Q4 2026.
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