Oil Prices Return to Pre-War Levels as Middle East Supply Increases

The Decline in Oil Prices

Oil prices have extended their decline to levels last seen before the start of the Iran war, as expectations of rising supply from the Middle East outweighed demand concerns.

Prompt-month Brent crude futures for August delivery fell $1.06 (1.44 percent) to $72.68 a barrel by 06:39 GMT, while US West Texas Intermediate (WTI) lost 76 cents (1.08 percent) to $69.58 a barrel.

Market Trends and Supply Concerns

Both contracts hit their lowest since February 27. August Brent was trading lower than September, which was priced at $73.59, signalling ample short-term supply.

Brent had fallen by more than $3 on Wednesday as supply concerns eased, while WTI settled down nearly $3.

The Impact of Increased Middle East Supply

Rising Middle East supply, together with Iran set to boost sales after a temporary reprieve from US sanctions, drove down prices of physical crude oil cargoes around the world.

US Energy Secretary Chris Wright told a forum that flows through the Strait of Hormuz were close to those before the start of the Iran war, with at least 20 million barrels having exited the strait in the past 24 hours.

New Routes and Future Outlook

An initial accord last week to end the US-Israeli war with Iran, which began on February 28, has allowed the resumption of traffic through the strait.

Oman opened temporary routes on Wednesday to ease tanker departures from the strait, with the International Maritime Organization and Omani authorities coordinating movements.