Oil prices fall as tankers exit Strait of Hormuz

BEIJING: Oil prices extended their decline on Thursday, edging closer to pre-war levels as stranded tankers exited the Strait of Hormuz following an initial accord to ​end the US-Israeli war with Iran, easing supply concerns.

Prompt-month Brent crude futures ‌for August delivery fell 40 cents, or 0.54%, to $73.34 a barrel as of 0004 GMT, while US West Texas Intermediate fell 27 cents, or 0.38%, to $70.07 a barrel.

August Brent was trading lower than September, ​which was priced at $73.59, signalling ample short-term supply.

“The speed of this decline has caught ​plenty off guard as markets price in a much faster return of ⁠Middle Eastern barrels than most had anticipated just a fortnight ago,” IG analyst Tony Sycamore ​said in a note.

Brent had fallen more than $3 on Wednesday as supply concerns eased, and WTI ​settled down nearly $3.

US Energy Secretary Chris Wright told a forum on Wednesday that flows through the Strait of Hormuz were close to what they were before the start of the Iran war, saying at ​least 20 million barrels had exited the strait in the last 24 hours. He added ​a return to complete normalcy would take a few weeks because the strait needs to be demined.

An ‌initial accord ⁠last week to end the US-Israeli war with Iran, which began on February 28, has allowed traffic through the strait to restart.

The accord set up a 60-day period of negotiations to tackle more difficult issues including Iran’s nuclear program. Wright said oil would continue to ​flow through the strait ​even if the deal ⁠did not hold, and that Iran would not be able to close it again.

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Oman on Wednesday opened temporary routes to ease tanker departures ​from the Strait of Hormuz, with the International Maritime Organization and ​Omani authorities ⁠coordinating movements. Qatar’s prime minister visited Oman for talks on initiating negotiations over the strait’s future management with Iran, Iraq and Gulf states.

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U.S. total crude stocks hit their lowest since 1984 last ⁠week, the ​Energy Information Administration said on Wednesday, on strong refining ​demand and as the government released oil from its emergency reserve. Markets, however, appeared unfazed by the EIA data ​as traders focused on the Strait of Hormuz.