Crude oil prices extended their decline today, with Brent crude sliding to $77.51 per barrel at the time of writing, and West Texas Intermediate at $73.62 per barrel, on reports that the United States and Iran were making progress in their peace talks.
The latest updates from the negotiations table include a report that the United States will waive sanctions on Iran’s oil industry for the 60-day duration of the cessation of hostilities agreed earlier this month. The two parties also agreed on a mechanism to end fighting between Israel and Lebanon, Reuters reported on Monday.
Also on Monday, Bloomberg reported that at least three supertankers, carrying a total of 6 million barrels of Iranian crude, moved to transit the Strait of Hormuz, in open AIS navigation showing Singaporean waters as a destination.
That’s the most Iranian crude openly making its way out of the key Iranian oil port at Kharg Island and into the Strait of Hormuz in a day since the war began on February 28, according to Bloomberg’s estimates. The news pushed oil prices lower, with U.S. gasoline prices extending their decline to six weeks.
“Looking ahead, the key uncertainty remains how quickly oil flows through the Strait of Hormuz can normalize,” ING commodity analysts wrote in a note today. “While the consensus is that this normalisation will take months rather than weeks, price action in the oil market suggests a more rapid recovery,” Warren Patterson and Ewa Manthey also said, noting, however, that the ceasefire remains fragile and hostilities could reignite at any moment.
“Transits over recent days look to have risen sharply, (which) the market will treat as a proxy for both physical oil, perhaps paper oil, and diplomatic progress,” Sparta Commodities’ head of research, Neil Crosby, wrote in a note, as cited by Reuters. “It feels like we will be stuck in this bearish risk-off/optimistic mood until such time as something changes.”
By Irina Slav for Oilprice.com
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