Oil prices fall on renewed expectations of higher global supply after oil tankers resumed transit through the Strait of Hormuz following a peace agreement between the United States and Iran.
By 0328 GMT on Friday, Brent crude futures dropped 43 cents, or 0.54%, to $79.42 per barrel. US West Texas Intermediate crude fell 17 cents, or 0.22%, to $76.43 per barrel. The more actively traded August WTI contract declined 30 cents to $75.55 per barrel.
Both benchmarks had already fallen sharply on Thursday, reaching their lowest levels since early March. The decline followed the passage of several tankers through the Strait of Hormuz, including three Saudi-flagged vessels carrying around six million barrels of crude oil.
The movement came just hours after the presidents of the United States and Iran signed an interim agreement aimed at ending their conflict and restoring stability to energy markets.
Market analysts expect the agreement to release more than 85 million barrels of oil that had been stranded in the Gulf region during the conflict. The deal also includes the removal of US sanctions on Iranian oil exports, a move that could further boost global supply.
Tim Waterer, chief market analyst at KCM, said traders were waiting for stronger evidence that shipping through the Strait of Hormuz was returning to normal before expecting a further decline in prices.
Before the conflict, nearly one-fifth of the world’s oil and liquefied natural gas shipments passed through the strategic waterway. Analysts believe trade flows could gradually normalize in the coming months if the peace agreement remains in place.
Major oil-producing countries in the region are also preparing to increase exports. Kuwait Petroleum Corporation announced that it had lifted all force majeure notices issued during the conflict.
Meanwhile, Iraq signaled a return to normal operations. Oil Minister Basim Mohammed said the country’s oilfields were ready to restore production and gradually return output to previous levels.
Despite the positive developments, uncertainty remains in the market. Israel has continued military operations against Hezbollah in Lebanon, raising concerns about the durability of the broader regional peace process.
Additional doubts emerged after US Vice President JD Vance withdrew from a planned meeting with Iranian negotiators in Switzerland.
Vandana Hari, founder of oil market analysis firm Vanda Insights, said the current geopolitical situation was still too fragile to give markets full confidence that shipping through the Strait of Hormuz would continue without disruption.
While the peace agreement has improved sentiment and eased immediate supply concerns, traders remain cautious as they watch developments across the Middle East.
