Oil Prices Ease Near Pre-War Range as US, Russia Plan Talks
Oil prices are rapidly declining towards the pre-Middle East war range as markets anticipate a diplomatic move between the US and Russia could boost supply. In the global commodity market on Thursday, oil prices extended losses with Brent crude slipping below $74 a barrel.
The decline was supported by steady tanker traffic through the Strait of Hormuz, and signs of continued diplomatic engagement involving the US, Iran and Russia eased concerns over potential supply disruptions.
Brent crude traded at $73.07 per barrel, down around 1.08% from the previous close of $73.87. US benchmark West Texas Intermediate (WTI) fell 0.89% to $69.71 per barrel, compared with $70.34 in the previous session.
US officials signalled that oil flows through the Strait of Hormuz had largely returned to normal following recent tensions in the Gulf, reducing fears of a disruption to one of the world’s most critical energy chokepoints.
US Energy Secretary Chris Wright said on Wednesday that some 20 million barrels of crude oil have exited the Strait of Hormuz in the last 24 hours via 72 ships.
Washington would ensure the flow of oil through the key waterway even in the absence of a deal with Iran, Wright told the Reuters Global Energy Forum in New York.
“We have normal flows today,” said Wright, adding that the volume is similar to recent flow levels following an initial US-Iran agreement to end the conflict.
Further easing supply concerns, US Secretary of State Marco Rubio said the technical group on Iran will reconvene next week in Switzerland. “The technical group will reconvene again on, I believe it’s the 30th,” Rubio told reporters in Kuwait.
Rubio is on a three-day tour of the United Arab Emirates, Kuwait and Bahrain from June 23-25 to discuss the memorandum of understanding between the US and Iran. In Bahrain, Rubio will also meet the Gulf Cooperation Council to discuss shared priorities across the region.
Russia and the US plan to hold a new round of consultations aimed at resolving longstanding disputes in their bilateral relationship, Russian Deputy Foreign Minister Sergey Ryabkov said Wednesday.
“I can confirm that such plans exist. There’s nothing to announce because there are no specific deadlines, but it’s understood they will continue,” Ryabkov told the Izvestia newspaper at the Primakov Readings foreign policy forum.
Ryabkov said he expected the consultations to take place by the end of summer, although he acknowledged difficulties in bilateral dialogue to eliminate these “mutual irritants.”
Meanwhile, expectations that global inflationary pressures may continue to ease have prompted investors to scale back bets on further US Federal Reserve tightening.
Money markets have increasingly shifted away from pricing in two additional rate hikes this year, with traders now largely expecting only one move before year-end.
Higher borrowing costs are generally viewed as negative for oil demand because they can slow economic growth and curb fuel consumption, adding another bearish factor for crude prices.
Oil Prices Decline on Removal of Iranian Export Restrictions
