Crude oil prices dipped earlier today following news reports about Iran and Oman renewing their talks about joint management of the Strait of Hormuz, as those reports were taken to mean the waterway could soon reopen for normal traffic.
Reuters reported that the two were discussing “a joint temporary navigational corridor” and clearing the strait of mines. As a result, Brent crude was trading at $86.69 per barrel at the time of writing, with West Texas Intermediate at $80.61 per barrel at the time of writing. Traders appear to have shrugged off the latest U.S. sanctions against Iran aimed at squeezing its oil trade even further.
ING commodity analysts wrote in a note earlier today that a Pakistani statement of progress on peace talks had also contributed to the downward pressure on crude. They were, however, cautious about any expectations of a swift return to normal in the Persian Gulf.
“Any agreement between these two parties [Iran and Oman] does not mean we will see normalisation in oil flows through the key chokepoint,” Warren Patterson and Ewa Manthey wrote. “We would likely need to see the US lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalisation.”
Meanwhile, tanker tracking data from Windward showed just one vessel traversing the Strait of Hormuz on Tuesday, a Barbados-flagged LPG carrier that entered the strait. No outbound tanker traffic was recorded for the 24-hour period, the firm said. The tanker moved in dark mode, the data also showed.
“The US claims that an average of 8-9m b/d of oil is flowing through the Strait of Hormuz, which may be achievable over short time periods,” ING’s Patterson and Manthey also wrote. “However, over a longer time frame, this number seems aggressive. Several ship-tracking estimates are coming in much lower, ranging from 2m b/d to around 6m b/d.”
By Irina Slav for Oilprice.com
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