Oil prices continued to decline on Wednesday as markets reacted to easing tensions between the United States and Iran. Investors also welcomed the reopening of key shipping routes through the Strait of Hormuz, a major artery for global oil trade.
After Asian markets opened, Brent crude oil fell by 37 cents. As a result, it traded at $76.71 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude dropped by another 36 cents to $72.85 per barrel.
The latest decline pushed oil prices close to their lowest levels in four months. Analysts said improving relations between Iran and the United States have reduced fears of supply disruptions in the region.
Moreover, the reopening of the Strait of Hormuz has allowed more oil tankers to move through the strategic waterway. Consequently, traders expect a steadier flow of crude oil to global markets.
Oil prices started falling after Iran and the United States agreed to work toward resolving their disputes within 60 days. The agreement also aims to end the current conflict and reduce regional tensions.
Tomomichi Akuta, an economist at the Mitsubishi Research Institute, said optimism surrounding the easing of tensions has weighed on crude prices. According to Akuta, the resumption of oil shipments through the Strait of Hormuz has further improved market sentiment.
He added that additional progress in nuclear negotiations could push oil prices back to levels seen before the conflict began. Therefore, investors continue to monitor diplomatic developments closely.
On Tuesday, Iran and Oman agreed to continue discussions regarding the management of the Strait of Hormuz. At the same time, US Secretary of State Marco Rubio warned that any Iranian attempt to impose transit fees would violate international law.
Furthermore, shipping data showed that three large oil tankers successfully passed through the Strait of Hormuz on Tuesday after previously facing delays. This development strengthened confidence that maritime traffic is returning to normal.
For now, market participants remain focused on diplomatic talks and shipping activity in the Gulf region. However, any setback in negotiations could quickly change market sentiment and affect global oil prices.
