Brent crude settled at $77.08 per barrel, down $0.82 (-1.1%), while West Texas Intermediate (WTI) crude settled at $73.21 per barrel, down $0.65 (-0.9%). Both benchmarks touched their lowest levels in nearly four months during the trading session.
Prices have trended lower since the United States granted Iran a 60-day sanctions waiver and negotiations advanced under the recently signed memorandum of understanding. On Tuesday, Iran and Oman continued discussions regarding the future administration of navigation through the Strait of Hormuz, while U.S. officials reiterated that any long-term agreement must preserve free passage through the waterway. Market participants remain focused on the pace at which oil production, exports, and shipping activity can normalize following more than three months of severe disruption.
Evidence of improving traffic through the Strait continued to emerge. Several previously stranded supertankers successfully transited the waterway, additional LNG carriers entered the region, and international efforts to clear vessels delayed by the conflict progressed. Iraq reported increasing production from its southern oilfields as export activity resumed, while other regional producers also worked to restore shipments. However, analysts cautioned that mine clearance operations, damaged infrastructure, vessel availability, insurance concerns, and port congestion could slow the return to normal operations.
Despite the recent decline in prices, underlying market fundamentals remain supportive. U.S. crude inventories, gasoline inventories, and diesel inventories are expected to have declined again last week, while Strategic Petroleum Reserve holdings remain at their lowest levels since 1983. As a result, although the unwinding of geopolitical risk premiums has pushed crude prices lower, historically low global inventories continue to provide a floor beneath the market as energy supplies gradually recover.