The price of oil has fallen to levels not seen since before the Iran war, according to BBC Business, as traffic through the key Strait of Hormuz shipping route gradually resumes. Global benchmark Brent crude briefly fell below $72.48 a barrel, the price it was at the day before the US and Israel launched attacks on Iran on 28 February, before edging up to $72.63.
Price Plunge and Recovery
Energy prices have been on a wild ride since Iran responded to the strikes by effectively closing the Strait of Hormuz, a critical waterway for oil and gas shipments. The cost of crude has been moving sharply lower since the US and Iran signed a Memorandum of Understanding (MOU) on 17 June which set out a 60-day period for negotiations on Tehran's nuclear programme and other measures to end the war. Representatives from the two sides met in Switzerland last weekend for talks to end the war, which resulted in the US partially lifting sanctions on Iranian oil exports, BBC Business reported.
Shipping Resumption and Maritime Intelligence
The number of vessels crossing the Strait of Hormuz has risen significantly since the MOU was signed, according to maritime intelligence firm Kpler. The ships passing through the waterway in recent days include those carrying crude oil, liquefied natural gas (LNG), fertiliser and other goods, Kpler told the BBC. The US and Iran had also formed a "communication line" to prevent misunderstandings "with the aim of safe passage for commercial vessels through the Strait of Hormuz", mediators Qatar and Pakistan said in a joint statement on Monday.
Maritime Risk Advisory Insights
There has been a "tremendous shift" with far more ships using the strait in recent days, said Dimitris Maniatis, the chief executive of Marisks, a maritime risk advisory firm working with ships stuck in the region. His company estimates around 80 ships have crossed the Strait of Hormuz since Monday after the first round of peace talks between US and Iran in Switzerland. A limited number of ships can cross a northern passageway with the permission of Iranian authorities, he said. The US navy has also provided guidance for vessels to travel through a southern route that is safe from mines and other obstacles that has been laid out since the war, Maniatis added.
Still Below Pre-War Levels
Despite the increase, the number of ships crossing the strait is still below levels seen before the war, when it was used by more than 100 ships a day. Hundreds of ships still appear to be waiting in the Gulf, according to BBC Business.
| Metric | Pre-War | Current (since Monday) |
|---|---|---|
| Ships crossing Strait of Hormuz (per day) | >100 | ~80 (cumulative since Monday) |
| Brent crude price (per barrel) | $72.48 (28 Feb) | $72.63 (25 June) |
The partial resumption of shipping and the MOU have eased supply fears, but the situation remains fragile. Traders will be watching the 60-day negotiation period and further shipping data for signs of a full recovery in oil flows.
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