Oil Prices Struggle as Hormuz Traffic Rebounds and U.S.-Iran Positive Diplomacy
WTI crude went down again today, trading at around $68 at the time of this article's publication. Brent crude, on the other hand, is currently trading at $70, which is also facing a big downward pressure
Crude oil extended its steep decline Wednesday, with West Texas Intermediate for August delivery dropping to around $68 per barrel. Recovering vessel traffic through the Strait of Hormuz and progressing indirect talks between Washington and Tehran have eased supply fears.
The selloff follows the signing of an agreement last month between the U.S. and Iran that halted hostilities for a 2 months window. The deal, struck roughly 124 days after armed conflict erupted between U.S.-Israeli forces and Iranian troops, reopened the critical maritime chokepoint that Iran had closed at the time of the war.
President Trump characterized the negotiations in Doha as “very good,” adding that Iranian de-nuclearization discussions are advancing. The WSJ stated that while Trump had several discussions with Defense Secretary Pete Hegseth and Joint Chiefs Chairman General Dan Caine about potentially resuming combat operations, the president decided to give a chance to diplomacy. He has also signaled willingness to extend the 60-day truce to address Iran’s nuclear program.
On the ground in Qatar, U.S. envoy Steve Witkoff and Jared Kushner met with Emir Sheikh Tamim bin Hamad Al Thani to advance peace talks, while Iran’s Deputy Foreign Minister Kazem Gharibabadi had a meeting with Qatar’s prime minister, as well as with a Pakistani official.
With near-term conflict risks fading, shipping has regained momentum. Al Jazeera previously reported that 21 vessels, including oil tankers, have been passing through Omani territorial waters since the strait's reopening.
On the supply side, American Petroleum Institute data showed U.S. crude inventories went down by 6.07 million barrels last week, and Cushing delivery hub in Oklahoma has shown that their inventories went up by about 709K barrels.
Meanwhile, Reuters reported that OPEC is contemplating a roughly 188K barrel-per-day output increase beginning in August.
Related assets: Crude Oil, Brent Crude