Oil prices slide to $74 as crude flows return to Strait of Hormuz

Global oil prices declined on Friday as shipping activity through the Strait of Hormuz rebounded sharply following the ceasefire agreement between the United States and Iran, easing concerns over potential disruptions to global crude supplies.

The international benchmark Brent crude fell by 1.9 per cent to $74.08 per barrel from the previous close of $75.50, while the US benchmark West Texas Intermediate (WTI) dropped 2.1 per cent to $70.41 per barrel, down from $71.92.

The latest decline came as data from analytics firm Kpler showed a significant recovery in tanker traffic through the Strait of Hormuz, one of the world’s most critical oil transit routes.

A total of 70 commercial vessels passed through the strategic waterway on June 24, marking the busiest shipping day since February 28 and more than doubling the traffic recorded a day earlier.

The vessels included several supertankers transporting at least 11 million barrels of crude oil, mainly from the United Arab Emirates, Saudi Arabia, Iraq and Iran.

The Strait of Hormuz handles around one-fifth of global oil supplies and serves as a major export route for producers in the Middle East.

Shipping activity through the corridor had collapsed following the outbreak of hostilities involving the United States, Israel and Iran on February 28.

Before the conflict, approximately 130 vessels crossed the Strait daily, transporting around 20 million barrels of oil and petroleum products, including 15 million barrels of crude oil and five million barrels of refined products.

However, traffic plunged to just 78 ship crossings on the first day of the conflict and, at one point, declined by almost 90 per cent below normal levels as fears of a blockade and supply disruptions intensified.

Market sentiment has improved significantly since Washington and Tehran reached a 14-point agreement on June 14 aimed at ending the conflict through negotiations, with a ceasefire officially taking effect on June 18.

The recovery in shipping activity has strengthened expectations that oil exports through the Strait of Hormuz will continue without major disruption, removing much of the geopolitical risk premium that had pushed prices higher in recent weeks.

Despite the easing concerns, geopolitical tensions in the region remain a source of caution for investors.

The UK Maritime Trade Operations agency reported on Thursday that a cargo vessel had been struck by an unidentified projectile off the coast of Oman, causing damage to its bridge, although no injuries or environmental pollution were recorded.

A US official confirmed that Washington was aware of the incident and was evaluating the circumstances surrounding the attack.

“President Trump has been clear that Iran cannot subvert the free flow of traffic in the Strait,” the official said.

Analysts said the rapid recovery in tanker traffic has reinforced market confidence that global oil supplies will remain stable, thereby keeping downward pressure on crude prices.

They added that developments in the Strait of Hormuz and broader geopolitical events in the Middle East will continue to dictate short-term oil price movements, while investors are also monitoring the potential impact of recent earthquakes on oil production in Venezuela.

The latest decline in oil prices could offer some relief to major oil-importing nations grappling with inflationary pressures, although continued geopolitical uncertainties suggest that volatility in the energy market is likely to persist in the coming weeks.