Oil prices fall as Strait of Hormuz reopens
What's the story
Oil prices witnessed a decline on Friday amid the reopening of the Strait of Hormuz and an interim US-Iran deal. The international benchmark Brent crude futures for August fell by 0.45% to $79.49 per barrel, while US West Texas Intermediate futures for July dropped by 0.31% to $76.36 per barrel.
Shipping surge
Tankers carrying over 12 million barrels crossed the strait
Vice President JD Vance announced that tankers carrying over 12 million barrels have crossed the Strait of Hormuz overnight. He added, "The Iranians, for the second night in a row, did not shoot at any ships in the Strait of Hormuz." "So far, they are honoring their end of the commitment."
Demand forecast
OPEC dismisses IEA forecasts of supply glut
OPEC Secretary General Haitham Al Ghais told CNBC that the organization does not expect a peak in oil demand anytime soon. He also dismissed International Energy Agency's forecasts predicting an impending supply glut. "We focus on fundamentals and not putting many ifs and buts in our forecasts, but rather focusing on actual numbers," Al Ghais said.
Price prediction
Analyst predicts oil prices to remain between $75 and $82
Tiago Lacerda, a market analyst at Axi, predicted that oil prices are likely to trade between $75 and $82 a barrel in the near term. He noted that Brent is roughly down 36% from its peak during the conflict. However, he also cautioned about the cautious nature of major shipping lines in resuming transits and high insurance rates.
Price impact
Reopening of Hormuz could release 93 million barrels of oil
The reopening of the Strait of Hormuz could release some 93 million barrels of non-Iranian oil from the Persian Gulf, Kpler analyst Muyu Xu said. This comes as Gulf producers have increased exports via ship-to-ship transfers off the United Arab Emirates and Oman this month. The lifting of US restrictions on Iranian crude could also release some 72 million barrels stranded on tankers west of Chabahar.