West Texas Intermediate (WTI) oil prices declined by more than 1% on Tuesday, trading around $73.00, as traders assessed diplomatic developments between the United States and Iran and the reopening of the Strait of Hormuz for oil shipments [1][2]. The drop in prices was driven by improving sentiment regarding regional de-escalation and expectations of increased Iranian oil supply, following a temporary 60-day waiver granted by the US that allows Iranian oil exports to resume [1]. Market reports indicate that over 30 million barrels of Iranian crude have already left the country in the past week, reinforcing expectations of easing supply constraints [1].
Shipping traffic through the Strait of Hormuz surged to its highest level since the conflict began at the end of February, with 109 vessels transiting from Saturday through Monday, according to Kpler [2]. President Donald Trump stated that 19 million barrels of oil flowed out of the strait on Monday, marking an all-time record [2]. Despite the increase, traffic remains below pre-conflict levels of over 130 ships per day, and a backlog of hundreds of ships persists [2]. The Joint Maritime Information Center (JMIC) lowered the regional threat level to moderate on June 18 after the US and Iran agreed to open the waterway during the 60-day negotiating window, but confirmed mines remain in the central channel, prompting vessels to use alternative routes [2].
The uptick in oil shipments has contributed to easing global oil prices, which had previously surged above $100 a barrel during the conflict's early months [2]. On Tuesday, Brent crude traded around $75 a barrel after declining about 0.3% on the day and over 4.5% in the past five days, while WTI was about $73 a barrel after declining roughly 0.8% on the day and around 7.7% over the last five trading days [2]. Analysts at ING highlighted that the pace of normalization in energy flows through the Strait of Hormuz will be a key factor for price action in the coming weeks [1]. Rabobank sharply lowered its Brent and WTI forecasts, citing a sustained reopening of the strait as supporting a bearish medium-term outlook for oil prices [1]. However, Commerzbank cautioned that shipping traffic remains well below pre-disruption levels and suggested that further downside in oil prices may be limited if normalization proves slower than expected [1].
Investors are now focused on the upcoming American Petroleum Institute (API) crude inventory report, which could influence WTI prices depending on whether it shows a larger-than-expected draw or a surprise build in US crude stockpiles [1].
CONCLUSION
WTI and Brent crude prices have fallen sharply as increased oil flows through the Strait of Hormuz and diplomatic progress between the US and Iran ease supply constraints and reduce geopolitical risk. While analysts see potential for further price declines if normalization continues, lingering disruptions and shipping backlogs could limit downside. Market participants are closely watching inventory data and ongoing negotiations for further direction.