Oil prices continue slide amid hopes for peace, opening of Strait of Hormuz
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- Brent crude futures for August delivery dipped nearly 1% on Wednesday, extending two-day declines of about 5% each, with the benchmark hitting $78.24 a barrel at 08:00 GMT — its lowest since March 3, three days after the war began.
- Brent crude prices had surged more than 50% during the US-Israel war on Iran but stood only about 7% above pre-war levels by Wednesday afternoon in Asia, per the source.
- Tamas Varga of PVM Oil Associates said Brent has fallen $17 per barrel over four trading sessions, calling it "a discernible vote of confidence that the worst, at least as far as supply disruptions are concerned, is behind us."
- Vandana Hari of Vanda Insights warned the slide is "entirely sentiment-driven," with markets front-running the Strait of Hormuz reopening and "not adequately factoring in" logistical hiccups or renewed geopolitical tensions.
- The US-Iran memorandum of understanding is due to be signed Friday in Geneva, with Iran expected to end its near-total Strait of Hormuz closure in exchange for the US lifting its blockade of Iranian ports.
- Strait of Hormuz traffic has been choked to a trickle by Iranian missiles, drones, and mines, removing an estimated 14 million barrels per day from global supply, while over 500 vessels are queued to exit the Gulf and naval mine-clearing is expected to take weeks at minimum.
- Stephen Cotton, general-secretary of the International Transport Workers' Federation, said the Friday signing would be "at best the beginning" of normalization, with a realistic return to normal shipping patterns "weeks, if not months, away."
Why it matters: A working Strait of Hormuz reopening under the Friday deal would restore roughly 14 million barrels per day to global supply, unwinding a conflict run that pushed Brent up more than 50%. But the $17 four-session drop already prices in the best case, while analysts flag a backlog of 500+ stranded vessels and weeks of mine-clearing — meaning the current price leaves little margin if delivery on the deal slips.
