Oil prices declined for a fourth consecutive session on Thursday, falling to their lowest levels since before the Iran war.
Concerns about disruptions to Middle Eastern crude supplies continued to ease as shipping traffic through the Strait of Hormuz moved closer to normal levels.
Brent crude futures for August delivery fell 1.5% to $72.65 per barrel by 05:55 ET. Meanwhile, West Texas Intermediate crude dropped 1.2% to $69.50 per barrel.
Both benchmarks reached their lowest levels since February 27, one day before the US-Iran conflict began.
Oil Erases Most of Its Geopolitical Risk Premium
Crude prices had already fallen by nearly 4% during the previous session.
The latest decline means oil has now erased most of the geopolitical risk premium that developed during the conflict.
Earlier fears that the war could severely disrupt energy supplies had pushed prices sharply higher. However, improving shipping conditions and easing regional tensions have reduced concerns about an extended supply shortage.
Strait of Hormuz Traffic Returns Toward Normal
The oil market remains focused on the Strait of Hormuz, one of the world’s most important routes for energy shipments.
Approximately one-fifth of global oil consumption passes through the waterway, making any disruption a major risk for international crude supplies.
US Energy Secretary Chris Wright said oil flows through the strait were close to normal. Around 20 million barrels reportedly exited the waterway during the previous 24 hours under military protection.
Shipping data also showed that more vessels had resumed transit after several weeks of disruption.
Several tankers that had remained stranded in the Gulf have now restarted their journeys.
Iranian Oil Exports Could Recover
Investors are also assessing the possibility of a recovery in Iranian oil exports.
Temporary relief from US sanctions and reduced regional hostilities could allow more Iranian crude to reach international markets.
The prospect of additional supply has further reduced fears of a prolonged oil shortage.
This has placed renewed downward pressure on crude prices as traders reassess the balance between global supply and demand.
Brent Crude Reverses Earlier War-Driven Surge
The latest selloff represents a major reversal from the earlier stages of the crisis.
Disruptions and restrictions in the Strait of Hormuz had previously pushed Brent crude above $120 per barrel at the height of the conflict.
However, the reopening of shipping routes and easing supply concerns have caused much of that rally to unwind.
Despite the decline, analysts warned that geopolitical risks have not disappeared completely.
Any renewed escalation between the United States and Iran could quickly revive concerns about supply disruptions and push oil prices higher again.
US Crude Inventories Fall Sharply
Traders also examined mixed US inventory data released by the Energy Information Administration.
Commercial crude inventories fell by 6.1 million barrels during the week ending June 19. Total stocks declined to 412.1 million barrels, their lowest level since January 2025.
The decline was significantly larger than analysts had expected.
Crude inventories at the Cushing, Oklahoma, delivery hub also fell by approximately 1.1 million barrels. Stocks at the key storage location reached their lowest level since 2014.
Fuel Inventories Move Higher
Although crude supplies declined, inventories of refined fuel products increased.
US gasoline stocks rose by 2.1 million barrels during the reporting period.
Distillate inventories, including diesel and heating oil, increased by 3.1 million barrels.
The rise in fuel supplies added to the bearish market tone, partly offsetting the positive impact of the larger-than-expected crude inventory decline.
Oil traders will continue monitoring Strait of Hormuz traffic, Iranian exports, US inventory data and regional tensions for clues about the next major price move.
