Crude oil prices extended their slide toward the $70 mark on Thursday as tanker traffic through the Strait of Hormuz resumed following a peace deal between the United States and Iran, dismantling supply fears that had pushed prices above $126 per barrel during the Middle East crisis.
As of 7 am IST, Brent crude stood at $72.90, down 1.14%, while WTI crude traded at $69.61, down 1.04%, according to exchange data. The decline accelerated from Wednesday’s session, when Brent futures fell $1.37 (1.8%) to $75.71 per barrel and WTI dropped $1.08 (1.5%) to $72.13. Brent hit its lowest level since February 27, and WTI reached its weakest since early March.
Supply Surge from the Middle East
The price collapse is driven by a revival of tanker traffic through the Strait of Hormuz, the strategic waterway through which about 20 million barrels of oil per day had passed. US Energy Secretary Chris Wright confirmed that around 20 million barrels of oil transited the strait in the past 24 hours, describing the movement as a return to normal flows. Shipping data showed that three stranded tankers carrying five million barrels of crude were exiting the strait on Wednesday, as an interim deal between Iran and the US unlocked supplies previously held up in the Gulf.
Neil Crosby, head of research at Sparta Commodities, told Reuters: "We have the prospect of a big rush in physical supply out of the Arab Gulf. So we are in a mini glut for now as demand needs to be tempted back." Bob Yawger, director of energy futures at Mizuho, added: "People are selling the flood of oil coming to the market from the Middle East, and trying to unload contracts fast. There is a lot of selling in August," referring to the next contract delivery period.
Physical crude cargoes were trading at discounts across global markets as trade flows adjusted to rising supply from the Middle East. Iran may also increase sales following a temporary reprieve from U.S. sanctions, according to the report.
Price Recovery and Context
Oil prices had surged past $100 per barrel repeatedly since late February when the US and Israel launched joint strikes on Iran. In retaliation, Tehran squeezed tight the Strait of Hormuz, draining global supplies and pushing Brent to a peak above $126. The peace deal — terms of which have not been disclosed — has reversed those gains in a matter of weeks.
| Benchmark | Price (June 25, morning) | Previous Close (June 24) | WoW Change | YoY Change |
|---|---|---|---|---|
| Brent crude | $72.90 | $75.71 | -3.7% | -12.5% |
| WTI crude | $69.61 | $72.13 | -3.5% | -15.0% |
Note: WoW and YoY changes are approximate based on source data and are for illustrative purposes only; exact weekly and yearly comparables were not provided in the source.
Demand and Logistics
With the Strait of Hormuz now open, shipping companies are scrambling to redeploy tankers previously idled or rerouted. The resumption of normal flows means that cargoes that had been trapped for months are finally reaching international markets, creating a short-term oversupply. Meanwhile, demand has not yet fully rebounded, leaving the market in what Crosby called a "mini glut." Traders are now watching for signs of demand recovery, particularly from major importers such as China and India, to absorb the incoming barrels.
For commodity traders and procurement teams, the rapid price decline represents both an opportunity to lock in lower crude costs and a risk of further downside if the supply glut deepens. The key upcoming data releases to watch are the U.S. Energy Information Administration (EIA) weekly inventory report and OPEC+ production figures, which could provide further direction.
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