Oil prices fall more than 1% on Wednesday

Oil prices fell by more than 1 per cent on Wednesday, extending weekly losses and hovering near four-month lows as signs emerged of improving oil flows through the Strait of Hormuz.

Brent crude futures declined 78 cents, or 1.0 per cent, to $76.30 a barrel by 0350 GMT, while US West Texas Intermediate crude fell 78 cents, or 1.1 per cent, to $72.43 a barrel. Both benchmarks had settled about 1 per cent lower on Tuesday, hitting their lowest levels since early March.

Market sentiment improved after vessel traffic through the Strait of Hormuz increased in recent days, although volumes remain below pre-conflict levels. Prices also came under pressure after Washington granted Tehran a 60-day sanctions waiver following initial peace talks, allowing Iran to continue oil exports, while hostilities in Lebanon eased.

Analysts said expectations of easing US-Iran tensions and a recovery in oil shipments through the strait weighed on crude prices, with further progress in nuclear negotiations potentially pushing prices back to pre-conflict levels.

Oman and Iran agreed on Tuesday to continue discussions on the future administration of navigation in the Strait of Hormuz, while US Secretary of State Marco Rubio said any Iranian attempt to impose transit fees would breach international law.

Despite the optimism, uncertainty remains over the durability of the diplomatic progress, with conflicting statements from Washington and Tehran regarding nuclear inspections.

Ship tracking data showed three stranded supertankers transited the strait on Tuesday, while the United Nations shipping agency said preparations were under way to allow hundreds of vessels stranded in the Gulf to resume passage following the US Iran ceasefire agreement.

Meanwhile, US crude inventories fell by 765,000 barrels in the week ended June 19, according to data from the American Petroleum Institute, compared with analysts’ expectations for a decline of about 4.5 million barrels.

Attribution: Reuters