Oil continues to fall: Markets bet on smoother passage through Hormuz

Oil prices continued to fall today, with North Sea Brent dropping to its lowest level since before the start of the US-Israeli attacks on Iran. Oil prices are falling in response to signs that more tankers are preparing to leave the Strait of Hormuz. At around 14:00 CEST, Brent was down 3.1 percent to below 74.70 dollars per barrel. US benchmark West Texas Intermediate (WTI) was also down 3.1 percent, trading below 71 dollars per barrel.

Tim Waterer, an analyst at KCM Trade, said that while the first signs of increased tanker activity were emerging, the market was already pricing in a scenario involving a broader return of Iranian oil to the global market and the normalization of traffic through the Strait of Hormuz. If sanctions were eased, Iran could increase production and exports relatively quickly, Waterer said, thanks to the large amount of oil stored on tankers. In that case, it would be a matter of weeks rather than months.

Oman also said it would keep the Strait of Hormuz open to shipping without charging fees. It has also designated two temporary routes to the north and south of the existing shipping lane to help vessels safely transit the area.

Prices came under pressure this week in response to a 60-day sanctions waiver Washington granted Tehran after initial peace talks. The waiver allows Iran to sell oil. Investors were also reassured by the easing of hostilities in Lebanon.

Ship-tracking data showed that three supertankers that had previously been stranded in the Strait of Hormuz passed through on Tuesday. The UN maritime agency said it was preparing an evacuation plan that would allow hundreds of stranded ships to transit the strait once a ceasefire agreement between the US and Iran was reached. However, uncertainty remains over how long the ceasefire will hold. US President Donald Trump said on Tuesday that Iran had agreed to inspections of its nuclear facilities for an indefinite period. Tehran, however, says it made no such concession.

"Markets are currently placing too much confidence in a favorable outcome without fully accounting for the risks associated with unresolved issues surrounding the nuclear program and disputes over inspections," Mark Malek, an analyst at Siebert Financial, said, according to Reuters.

Oil prices in dollars per barrel (about 159 liters)