Crude Oil Falls Below Key Levels as Hormuz Traffic Normalises

Crude oil prices continued to retreat on Thursday, moving closer to pre-conflict levels as concerns over supply disruptions in the Middle East eased following improved tanker movement through the Strait of Hormuz.

Brent crude was trading at $72.90 per barrel at around 7 a.m. IST, down 1.14%, while U.S. West Texas Intermediate (WTI) crude declined 1.04% to $69.61 per barrel.

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The latest decline comes after a steep correction in the previous session, when both benchmark contracts fell to their lowest levels in almost four months. Brent settled down 1.8% at $75.71 per barrel, while WTI dropped 1.5% to $72.13 per barrel.

Supply Concerns Ease

Crude oil prices had surged earlier this year amid heightened tensions involving Iran and fears that shipping through the Strait of Hormuz could be disrupted. The waterway is one of the world’s most important energy transit routes and handles a significant share of global crude exports.

Shipping has, however, increased lately according to Chris Wright, the U.S. Energy Secretary who said 20 million barrels of oil had been shipped through the Strait of Hormuz over the last 24 hours, meaning the situation is now back to normal.

Shipping data also showed that three previously stranded tankers carrying about five million barrels of crude oil had resumed transit through the strait on Wednesday. The movement followed an interim understanding between Iran and the U.S., which helped ease logistical bottlenecks in the region.

Market Adjusts to Higher Supply Expectations

The reopening of shipping routes has prompted traders to reassess supply risks that had supported prices during the conflict period. Physical crude cargoes have started trading at discounts in several markets as additional volumes become available.

The possibility of increased Iranian oil exports has also weighed on prices. Market participants are closely tracking developments after Washington granted temporary sanctions relief, creating room for additional crude supplies to enter global markets.

Earlier in the year, crude prices had climbed sharply after military action involving the U.S., Israel and Iran heightened fears of disruptions across the Gulf region. Concerns over restricted movement through the Strait of Hormuz pushed oil prices above the $100-per-barrel mark at various points during the escalation.

Focus Shifts to Global Supply Balance

Since tanker activity is back on track and the worries about supply have subsided, all eyes are now turning towards fundamentals, such as inventory movements and exports from countries that produce oil.

This pullback has undone much of the rise that was witnessed during the time when there were tensions in the Middle East, and prices have returned close to their levels prior to the outbreak of geopolitical worries.