Oil prices fall further as Strait of Hormuz traffic resumes after US-Iran deal

Oil prices have fallen further as vessel traffic through the Strait of Hormuz continues to recover after a US-Iran memorandum of understanding signed on 17 June. Brent crude briefly dropped below $72.48 a barrel, returning to the level seen before the conflict began, before edging back up to $73.23. The move reflects a sharp easing in market fears over disruption to one of the world's most important energy shipping routes.

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The latest data cited by maritime intelligence firm Kpler suggests 284 vessels have crossed the strait since 18 June, the day after the deal was signed. That is still below the pre-conflict average of about 138 crossings a day, but it marks a significant increase from the period when Iran had effectively closed the waterway. The ships now moving through the corridor are carrying crude oil, liquefied natural gas, fertiliser and other goods.

The agreement between Washington and Tehran set out a 60-day period for negotiations on Iran's nuclear programme and other measures aimed at ending the war. Representatives from the two sides met in Switzerland last weekend, after which the United States partially lifted sanctions on Iranian oil exports. Mediators Qatar and Pakistan said the two sides had also formed a communication line to reduce misunderstandings and support safe passage for commercial vessels.

The recovery matters because the Strait of Hormuz is a critical chokepoint for global oil and gas shipments, and even short interruptions can move energy prices sharply. The recent fall in Brent crude suggests traders are reassessing the risk premium that built up during the conflict. It also points to expectations that more Iranian oil could return to the market if sanctions relief continues.

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Maritime advisers say the improvement is real but incomplete. Dimitris Maniatis, chief executive of maritime risk firm Marisks, said there had been a "tremendous shift" in recent days, although some ships are still using a limited northern passage with Iranian permission. He also said the United States Navy has provided guidance for vessels to use a southern route that avoids mines and other obstacles laid during the war.

What remains unclear is how quickly traffic can return to normal levels and whether the current arrangements will hold if talks stall. Hundreds of ships are still reported to be waiting in the Gulf, and the strait remains below its pre-war throughput. The next test will be whether the temporary shipping measures, sanctions relief and diplomatic channel can keep the corridor open without further disruption.

Oil prices have fallen to their lowest levels since before the Iran war, after supply through the Strait of Hormuz recovered and expectations for Middle East output improved. Brent crude and West Texas Intermediate both extended declines on Thursday, with traders pointing to a stronger flow of cargoes through the key shipping route. The move marks a sharp reversal from earlier fears that the conflict could disrupt global energy supplies.

Prompt-month Brent crude for August delivery fell to $72.68 a barrel, down $1.06, while West Texas Intermediate dropped to $69.58 a barrel, down 76 cents. Both benchmarks were at their lowest since February 27, the day before the war began. August Brent also traded below September Brent, a sign that the market sees near-term supply as comfortable.

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The decline followed a drop of more than $3 on Wednesday as concerns over shortages eased. US Energy Secretary Chris Wright said flows through the Strait of Hormuz were close to pre-war levels, with at least 20 million barrels passing through the strait in the previous 24 hours. He said a full return to normal would take several weeks because the waterway still needs to be cleared of mines.

Oman has opened temporary routes to help tankers leave the strait, with the International Maritime Organization and Omani authorities coordinating movements. Iran's Revolutionary Guards later warned against crossings without authorisation, saying vessels that did not comply would be dealt with. The price move matters because the Strait of Hormuz is one of the world's most important oil transit routes, and any disruption can quickly affect global energy markets.

The latest decline suggests traders are reassessing the risk premium that had been built into crude prices during the conflict. It also reflects expectations that Iran may increase sales after a temporary reprieve from US sanctions, adding to available supply. For refiners, importers and shipping companies, the shift could ease immediate cost pressures if the current flow of cargoes continues.

The market reaction comes after an initial accord last week ended the US-Israeli war with Iran and allowed traffic through the strait to resume. That agreement also opened a 60-day period of negotiations on broader issues, including Iran's nuclear programme. Wright said oil would continue to flow through the strait even if the deal did not hold, and that Iran would not be able to close it again.

Tehran, meanwhile, has said it plans to impose what it calls maritime service fees, which Washington argues would be inappropriate in an international waterway. What remains unclear is how quickly the strait can return to fully normal operations and whether the temporary routes will be enough to keep tanker traffic steady. It is also uncertain whether the ceasefire arrangement and follow-on talks will hold, or whether renewed tensions could again affect prices.

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