On June 24th, international crude oil prices continued their sharp decline. US WTI crude oil futures broke through the key $70 per barrel psychological barrier during the session, plummeting 4.4% intraday to hit its lowest level since March 2nd, effectively retreating to the price levels seen before the outbreak of conflict involving Iran.
The price for the August contract of Brent crude futures also fell by 4.5%, settling at $73.6 per barrel. Market expectations for a de-escalation in Middle East tensions, the potential restoration of Iranian oil supply, and concerns over US inflation leading to anticipated interest rate hikes have all contributed to downward pressure on oil prices.
Influenced by this development, US airline stocks experienced a broad-based rally.
Market analysis suggests the drop in oil prices is linked to expectations for the resumption of transport through the Strait of Hormuz. Traders indicate that the market is gradually pricing in the possibility of Iranian crude re-entering the global market and the normalization of traffic through the strategic waterway.
Some analysts point out that if related sanctions are eased, Iran's crude oil production and exports could resume growth within weeks, as significant volumes of oil are already stored on tankers.
Reports also indicate that prior to this, approximately several hundred tankers and over 10,000 seafarers were stranded in the Persian Gulf region. Before the conflict, around 20% of global oil transportation transited through the Strait of Hormuz.
Furthermore, following an agreement between the US and Iran allowing commercial vessels to pass through the strait free of charge for a 60-day period, maritime traffic has shown a noticeable increase this week.
Separately, the US President posted on social media, threatening to terminate negotiations with Iran if it begins imposing fees on vessels passing through the Strait of Hormuz. He stated that Iran had informed the US it would not levy any transit fees, insurance charges, or any other form of fee on ships using the strait. He warned that negotiations would end immediately if this information proved false.
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