(Bloomberg) – Brent oil fell below $75 for the first time since the Iran war began, as more tankers openly cross the Strait of Hormuz, while the U.S. and Iran signal progress toward ending the war.
The global benchmark shed has much as 3.1% to the lowest since Feb. 27.Vesselsare transiting the waterway with their satellite signals switched on, indicating growing confidence among shipowners. The International Maritime Organization also said it had received safety guarantees allowinghundreds of shipsto exit the Persian Gulf.
Washington and Tehran have both flagged early progress in talks to end the war that began in late February, although negotiations are likely to be protracted and claims from the two sides havediverged. In a sign of how much oil has been leaving Hormuz in recent weeks, the International Energy Agencyestimatesthat the United Arab Emirates is exporting oil at nearly 85% of pre-war levels.
The result has been a collapse in prices for real-world barrels. The nearest Brent futures timespread—a key gauge of market supply—has flashed weakness in recent days, while premiums for barrels from the North Sea to West Africa are tumbling.
Oil prices are down about 40% from their high during the peak of the conflict, with the steady increase in traffic adding to workarounds that were put in place to mitigate disruption through Hormuz at the height of the war. Barrels have begun flowing through the waterway and the UAE alone has sold around 60 MMbbl from inside the Persian Gulf in recent weeks.
The Republican-led Senate voted Tuesday to end the U.S. war with Iran in a rare symbolic rebukeof President Donald Trump. While the resolution is unlikely to force any changes in the administration’s strategy, it represents the latest sign that the president lacks domestic support for the effort.
Separately, Trump said in a social media post he had ordered the Department of Justice to look into why gasoline priceshaven’t fallen faster as oil drops. The national average retail price has declined 14% since late May and is now below $4 a gallon, although it remains above the five-year seasonal average, according to data from the American Automobile Association. U.S. retail diesel prices fellbelow $5 a gallon for the first time since mid-March.
Still, there are signs of tightness in some markets, including the U.S. The American Petroleum Institute (API) reported crude inventories at the key storage hub of Cushing, Oklahoma, fell by another 1 MMbbl last week, according to a document seen by Bloomberg. If confirmed by official data later Wednesday, that would mean stockpiles have dropped below the 20-million-barrel mark that’s widely seen as the minimum operating level.
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