(RTTNews) – Crude oil prices are roughly flat on Thursday after losing early in the session due to easing supply concerns but gained ground later after the U.S. and Iran expressed contradictory remarks over the management of the Strait of Hormuz.
WTI Crude Oil for August month delivery was last seen trading up by $0.05 (or 0.07%) at $68.63 per barrel.
On June 17, U.S. President Donald Trump and Iran’s President Masoud Pezeshkian signed a Memorandum of Understanding. In accordance with the agreement, both nations halted attacks for a 60-day period to pave the way for negotiations.
Iran reopened the Strait of Hormuz it had earlier shut when the war started on February 28. The reopening led to the gradual resumption of shipping traffic with stranded vessels moving to their respective destinations.
With oil and energy supply-related concerns diminishing, crude oil prices started declining.
The ceasefire was put to test after a brief exchange of attacks last weekend between the U.S. and Iran. However, both nations agreed to reconcile and return for talks.
Negotiators from the U.S. and Iran met with Qatari representatives for indirect talks in Doha yesterday.
Though no breakthrough news on their mutual disagreements was announced, the U.S. and Iran agreed to meet for the next round of talks after the cremation of their late Supreme Leader Ayatollah Ali Khamenei on July 9.
Yesterday, the Wall Street Journal reported that Trump discussed with senior U.S. military officials regarding restarting attacks on Iran. However, he wanted to give diplomacy a full chance before employing aggressive tactics.
Trump is also amenable to extend the current ceasefire period, if required, to discuss with Iran on their nuclear ambitions.
Energy experts are watching the developments with cautious optimism owing to the strong disagreement between the U.S. and Iran over the Strait of Hormuz.
While Iran wants full authority to control the management of shipping traffic across the Strait of Hormuz including an option to collect tolls, U.S. insists on keeping the shipping lane free for all international ships.
Data from maritime tracking firm Kpler revealed that as of June 30, the strait was transited by 34 ships among which commercial, energy-related, and auxiliary were included.
As of July 1, Kpler confirmed the crossings to 45, up from the previous day.
Nearly 21 crossings were sighted across the Omanian territorial waters while 11 transited via the Iranian route.
Prior to the start of the conflict, nearly 130 ships passed through the strait daily.
Iran’s joint military command issued a warning to all ships to travel only via Iran-designated routes failing which Iran may respond forcefully.
Analysts are of the view that until clarity emerges on route governance, fee structures, and safe-passage assurances, full recovery in oil flow to pre-war level may not happen soon.
Citing three sources, Reuters reported yesterday that the Organization of Petroleum Exporting Countries have agreed to hiking their output targets from August during their upcoming meeting on Sunday. The target is set to increase by about 188,000 barrels per day.
The U.S. dollar index was last seen trading at 100.87, down by 0.53 (or 0.52%) today.
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