Oil futures fell sharply on Wednesday, extending a week-long slide to trade near four-month lows, as a growing number of tankers navigating the Strait of Hormuz eased fears of a prolonged supply disruption. The increased vessel movement, coupled with diplomatic signals from Washington and Tehran, is reshaping market sentiment around crude flows from the Persian Gulf.
Brent crude futures dropped 78 cents, or 1.0%, to $76.30 a barrel by 0350 GMT, while U.S. West Texas Intermediate slipped 78 cents, or 1.1%, to $72.43 a barrel. Both benchmarks settled around 1% lower on Tuesday, touching their weakest levels since early March.
Strait Crossings Rise but Remain Below Pre-Crisis Levels
Market analysts pointed to a noticeable uptick in tanker activity as the primary driver behind the latest price retreat. ING commodity strategists noted in a Wednesday briefing that positive signals from the Gulf are fueling optimism, even though vessel crossings remain well below pre-war levels.
“More tankers moving through Hormuz ease supply disruption fears,” the strategists said, highlighting that the incremental improvement is enough to shift trader expectations in the short term.
Ship-tracking data confirmed that three stranded supertankers passed through the strait on Tuesday. The UN shipping agency also disclosed that an evacuation plan is underway to enable hundreds of ships carrying approximately 11,000 seafarers to exit the Gulf, following the U.S.-Iran ceasefire agreement.
Diplomatic Developments Pressure Crude Benchmarks
Oil markets have faced additional headwinds this week after Washington granted Tehran a 60-day sanctions waiver following initial peace talks, permitting Iranian oil sales. The easing of hostilities in Lebanon has further contributed to the bearish tone.
“Crude oil prices were weighed down by hopes of easing U.S.-Iran tensions and recovery in oil shipments through the Strait of Hormuz,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting. “Further progress in nuclear negotiations could push prices back to pre-war levels.”
On Tuesday, Oman and Iran agreed to continue discussions on the future administration of navigation in the strait. U.S. Secretary of State Marco Rubio warned that any Iranian attempt to levy transit fees would violate international law, underscoring the fragile nature of the diplomatic track.
Uncertainty Lingers Over Durable Peace
Despite the positive momentum, significant questions remain about the durability of the emerging accord. President Donald Trump stated on Tuesday that Iran had agreed to nuclear inspections into “infinity,” while Tehran countered that no such concession had been made during negotiations.
An Iranian military source told the Fars news agency that only a limited number of vessels are being permitted to pass through the strait each day, under coordination with Iran’s Revolutionary Guards Navy. This controlled approach suggests that a full normalization of shipping traffic is not yet imminent.
Investors are also monitoring how quickly Middle Eastern producers can restore exports and whether additional ships will enter the region in the coming days.
U.S. Inventory Data Adds Mixed Signals
In a separate development, U.S. crude stocks fell by 765,000 barrels in the week ended June 19, according to American Petroleum Institute data cited by market sources. The decline was significantly smaller than the average estimate of 4.5 million barrels from nine analysts polled by Reuters, potentially capping further downside for prices if demand signals strengthen.
