Brent Crude Falls to Lowest Since February as Hormuz Traffic Resumes After War-Ending Accord

Prompt-month Brent crude futures for August delivery fell 25 cents, or 0.34 percent, to $73.49 a barrel by 1327 GMT on Thursday. U.S. West Texas Intermediate crude futures lost 24 cents, or 0.34 percent, to $70.10 a barrel at the same time.

-Israeli strikes on Iran began. An accord reached last week ended the war and reopened traffic through the Strait of Hormuz, which Iran had effectively blockaded. The agreement established a 60-day period of negotiations on issues including Iran’s nuclear program.

U.S. Energy Secretary Chris Wright told a forum that flows through the strait were close to pre-war levels, with at least 20 million barrels having exited in the last 24 hours. He said normalization would take a few weeks because the strait requires demining.

Wright added that oil would continue to flow through the strait even if the deal did not hold and that Iran would not be able to close it again. Rystad Energy analyst Janiv Shah said the backlog of vessels in the Persian Gulf is being cleared, creating a wave of supply, and that supply assets and terminals are restarting soon.

UBS analyst Giovanni Staunovo said most of the increase in flows from the Gulf consists of outbound ships exiting the strait.

Staunovo noted that a significant rise in inbound flows would require shipping confidence to return, including safety assurances and mine clearance to allow insurance premiums to normalize. Goldman Sachs said it does not expect a large pick-up in Iranian production even if sanctions relief extends beyond the August 21 expiry.

UBS lowered its Brent price forecasts to $85 per barrel for end-September and end-December, and to $80 per barrel for end-March and end-June 2027.