(June 24): Oil held declines as more tankers openly cross the Strait of Hormuz, with the US and Iran making progress towards ending the war.
West Texas Intermediate traded near US$73 a barrel after falling less than 1% in the previous session. Brent crude closed above US$77. Vessels are transiting the strait with their satellite signals switched on, signaling growing confidence by shipowners, while the International Maritime Organization said it had received safety guarantees allowing hundreds of ships to exit the Persian Gulf.
The US and Iran have both flagged early progress in discussions to end the war that started in late February, although further talks are likely to be protracted and differing claims have started to emerge. Iran and Oman said they were beginning work on a pact for the administration of Hormuz, including the cost of managing transit, with concerns remaining that Tehran will levy a fee.
“I think the market has been waiting for the last of the hopeful bulls to give in and we are finding a bottom close to US$75,” said Carl Larry, an oil and gas analyst at Enverus. “There’s a lot of questions ahead: replacing supply, wait time for loadings, China back on the buy side.”
The Republican-led Senate voted on Tuesday to end the US war with Iran, in a rare symbolic rebuke of the president. While the resolution is unlikely to force any changes in the Trump administration’s strategy, it represents the latest sign that the president lacks domestic support for the effort.
Oil futures have come off by over a third since their wartime highs, helped by expectations of an impending wave of crude. The US has temporarily allowed for the purchase of Iranian oil as part of the process, aiding a push by sellers of such supplies in wooing Asia’s biggest refiners.
See also: Hormuz traffic picks up as more tankers broadcast crossings
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