Oil Extends Decline as Iran Talks Ease Hormuz Supply Fears

Oil prices fell for a third consecutive session on Wednesday as shipping activity through the Strait of Hormuz showed signs of recovery.

Improving relations between the United States and Iran also reduced concerns about a prolonged disruption to Middle East energy supplies.

Brent and WTI Crude Prices Move Lower

Brent crude futures for August delivery fell 0.8% to $76.46 per barrel by 02:23 ET, or 06:23 GMT.

West Texas Intermediate crude futures also declined 0.8% to $72.65 per barrel.

Both major oil benchmarks had settled near four-month lows during the previous trading session.

Strait of Hormuz Traffic Begins to Recover

Oil market sentiment weakened as shipping activity through the Strait of Hormuz gradually improved.

The strategic waterway had experienced serious disruption during months of conflict. As a result, traders became concerned about the availability of oil and liquefied natural gas from the Persian Gulf.

Recent reports showed that several stranded supertankers had successfully left the Gulf while carrying crude oil cargoes.

A growing number of liquefied natural gas vessels linked to Qatar have also resumed journeys through the strait.

Traders viewed these movements as an early indication that regional energy flows may be returning to normal.

U.S.-Iran Talks Reduce Supply Concerns

Negotiators from the United States and Iran have agreed to a 60-day roadmap aimed at reaching a broader political settlement.

Washington has also issued a temporary sanctions waiver that allows certain Iranian oil exports to resume through August.

These developments increased expectations that additional crude oil supplies could return to the global market.

A larger supply outlook generally places downward pressure on oil prices, particularly when demand growth remains uncertain.

Hormuz Oil Flows Remain Below Pre-War Levels

ING analysts estimated that approximately six million to seven million barrels of oil per day recently passed through the Strait of Hormuz.

That figure remains well below the pre-war volume of around 20 million barrels per day.

However, Saudi Arabia and the United Arab Emirates can redirect part of their oil production through pipelines that bypass the strait.

According to ING, flows through Hormuz may only need to recover to approximately 14 million barrels per day for total Persian Gulf supplies to return to pre-war levels.

Analysts Say the Oil Sell-Off May Be Excessive

Despite the recent decline, ING analysts believe the oil market sell-off may have gone too far.

They noted that global oil market conditions are still tightening, even as prices reflect expectations of a rapid recovery in Persian Gulf supplies.

Any delays in restoring normal shipping activity could therefore provide fresh support for Brent and WTI crude prices.

U.S. Crude Inventories Decline

Investors also evaluated the latest U.S. inventory figures from the American Petroleum Institute.

U.S. crude oil inventories fell by 765,000 barrels during the week ending June 19.

However, the decline was smaller than analysts had expected.

Crude inventories at the Cushing, Oklahoma, delivery hub decreased by one million barrels.

Meanwhile, gasoline stocks rose by 1.2 million barrels, while distillate inventories increased by 1.4 million barrels.

Traders Await Official EIA Data

Oil traders are now waiting for official inventory data from the U.S. Energy Information Administration.

The figures could confirm whether domestic crude supplies continued to decline during the latest reporting period.

A larger-than-expected inventory draw could support oil prices. In contrast, rising fuel stockpiles or weaker demand indicators could add to the recent selling pressure.