Oil prices fall towards pre-war levels as tankers exit Strait of Hormuz

Oil prices extended their decline on Thursday, edging closer to pre-war levels as stranded tankers exited the Strait of Hormuz following ​an initial accord to end the US-Israeli war with Iran, easing ​supply concerns.

Prompt-month Brent crude futures for August delivery fell 40 cents, or 0.54 per cent, ‌to $73.34 a barrel as of 0004 GMT, while US West Texas Intermediate fell 27 cents, or 0.38 per cent, to $70.07 a barrel.

August Brent was trading lower than September, which was priced at $73.59, signalling ample short-term supply.

"The speed of this decline has caught plenty off guard as markets price in a much faster return of Middle Eastern barrels than most had anticipated just a fortnight ago," IG analyst Tony Sycamore said in a note.

 

Brent had fallen more than $3 on Wednesday as supply concerns eased, and WTI settled down nearly $3.

US Energy Secretary Chris Wright told a forum on Wednesday that flows through the ‌Strait of Hormuz were close to what they were before the start of the Iran war, saying at least 20 million barrels had exited the strait in the last 24 hours. He added a return to complete normalcy would take a few weeks because the strait needs to be demined.

An initial accord last week to end the US-Israeli war with Iran, which began on February 28, has allowed traffic through the strait to restart.

The ​accord set up a 60-day period of negotiations to tackle more difficult issues including Iran's nuclear program. ‌Wright said oil would continue to flow through the strait even if the deal did not hold, and that Iran would not be able to close it again.

Oman ​on ‌Wednesday opened temporary routes to ease tanker departures from the Strait of Hormuz, with the International Maritime ‌Organization and Omani authorities coordinating movements. Qatar's prime minister visited Oman for talks on initiating negotiations over the strait's future management with Iran, Iraq and Gulf states.

US total ‌crude ​stocks hit their ​lowest since 1984 last week, the Energy Information Administration said on Wednesday, on strong refining demand and as the government released oil from its emergency reserve. Markets, ‌however, appeared unfazed ​by the EIA data as traders focused on the Strait of Hormuz.