Oil Falls to Pre-War Levels on Supply Surge

By Staff, Agencies

Oil prices extended losses to pre-war levels as expectations of increased Middle East supply outweighed concerns over global demand.

Prompt-month Brent crude futures for August delivery fell $1.06 [1.44%] to $72.68 a barrel by 06:39 GMT, while US West Texas Intermediate [WTI] lost 76 cents [1.08%] to $69.58 a barrel.

As the sell-off deepened, both contracts fell to their lowest levels since February 27, while August Brent traded below September futures, signaling ample near-term supply.

The decline followed a sharp drop on Wednesday, when Brent fell by more than $3 and WTI lost nearly $3 as supply concerns eased.

According to US officials, flows through the Strait of Hormuz have nearly returned to pre-war levels, with more than 20 million barrels transiting the waterway over the past 24 hours.

However, US Energy Secretary Chris Wright said a full return to normal operations could take several weeks as the strait is cleared of mines.

Meanwhile, increased Middle East supply and expectations of higher Iranian exports following a temporary easing of US sanctions continued to pressure global crude prices.

Notably, an initial accord to end the US-"Israeli" war on Iran has facilitated the resumption of maritime traffic through the Strait of Hormuz.

Under the agreement, the parties entered a 60-day negotiation period to address outstanding issues, including Iran’s nuclear program.

Despite uncertainty surrounding the talks, Wright claimed oil shipments would continue through the strait even if the accord collapses.

At the same time, Tehran has said it plans to impose what it calls maritime service fees, as opposed to tolls, while the United States argues it is an international waterway and therefore should not be charged.

In parallel, Oman opened temporary routes on Wednesday to ease tanker departures from the strait, with the International Maritime Organization and Omani authorities coordinating movements.

Responding to the move, Iran’s Revolutionary Guards [IRG] warned against any crossings of the Strait of Hormuz without authorization, saying vessels not complying “will be dealt with” and condemning the new routes.