Oil prices fall as Hormuz shipping resumes

Oil prices have dropped to levels last seen before the Iran war as ships gradually return to the Strait of Hormuz, easing fears over one of the world’s most important energy routes.

Brent crude, the global benchmark, briefly fell below $72.48 a barrel — the level recorded the day before the United States and Israel launched attacks on Iran on Feb. 28 — before edging up to $72.63, the BBC reported. Al Jazeera reported that prompt-month Brent crude futures for August delivery fell $1.06, or 1.44%, to $72.68 a barrel by 06:39 GMT, while U.S. West Texas Intermediate dropped 76 cents, or 1.08%, to $69.58. Both contracts touched their lowest levels since Feb. 27.

The decline follows a sharp slide on Wednesday, when Brent fell by more than $3 and WTI settled down nearly $3 as supply concerns eased. August Brent was trading below September Brent, which stood at $73.59, a pattern Al Jazeera said signaled ample short-term supply.

Energy markets have swung sharply since Iran responded to U.S. and Israeli strikes by effectively closing the Strait of Hormuz, a critical passage for oil, liquefied natural gas and other shipments. Prices have moved lower since the United States and Iran signed a memorandum of understanding on June 17 that established a 60-day period for negotiations on Tehran’s nuclear program and other measures to end the war.

Representatives from the two sides met in Switzerland last weekend for talks that resulted in the United States partially lifting sanctions on Iranian oil exports. Rising Middle East supply, along with Iran’s expected increase in sales after a temporary reprieve from U.S. sanctions, has pushed down prices for physical crude cargoes around the world, Al Jazeera reported.

Traffic through the Strait of Hormuz has risen significantly since the memorandum was signed, according to maritime intelligence firm Kpler. The vessels moving through the waterway in recent days include ships carrying crude oil, LNG, fertilizer and other goods, Kpler told the BBC.

Dimitris Maniatis, chief executive of maritime risk advisory firm Marisks, said there had been a “tremendous shift” in recent days, with far more ships using the strait. His company estimates about 80 ships have crossed since Monday after the first round of U.S.-Iran peace talks in Switzerland. That remains below prewar levels, when more than 100 ships a day used the strait, and hundreds of ships still appear to be waiting in the Gulf.

U.S. Energy Secretary Chris Wright said flows through the strait were close to prewar levels, with at least 20 million barrels exiting in the previous 24 hours. He said a return to complete normality would take a few weeks because mines still need to be cleared.

Qatar and Pakistan, acting as mediators, said Monday that the United States and Iran had created a “communication line” to prevent misunderstandings “with the aim of safe passage for commercial vessels through the Strait of Hormuz.” Oman also opened temporary routes Wednesday to ease tanker departures, with the International Maritime Organization and Omani authorities coordinating movements. Iran’s Revolutionary Guards warned Thursday that vessels crossing without authorization “will be dealt with.”

The dispute over passage also has a political edge. Iran has said it plans to impose maritime service fees, while Washington says the strait is an international waterway and should not be charged. Secretary of State Marco Rubio, speaking in Bahrain, warned that allowing such fees would risk “total chaos.”

“International waterways do not belong to any nation state,” Rubio said. “This is a foundational principle in the world today.”

Lower crude prices have shifted attention to fuel costs. The average U.S. price of regular gasoline has fallen to about $3.93 a gallon after reaching $4 in April, its highest since 2022, but remains above prewar levels. President Donald Trump on Wednesday ordered an investigation into major energy companies, accusing Shell, ExxonMobil and others of “gouging” drivers.

“Oil prices have come down so much and we are not seeing anything at the pump by comparison the way they should be,” Trump told reporters in the Oval Office.

The American Petroleum Institute said fuel prices “don’t move in lockstep with crude oil.” In Britain, the competition watchdog said last month it had found no widespread evidence of unfair petrol price hikes, adding that average profit margins were “broadly unchanged” between February and March.