Oil prices settled around pre-Iran war levels on Monday as exports through the Strait of Hormuz recovered further.
Brent crude futures settled at $71.99 a barrel, down 13 cents or 0.2 per cent, while the US West Texas Intermediate (WTI) crude futures finished at $68.55 a barrel, down 14 cents or 0.2 per cent.
Prices have fallen over the past month back to levels last seen in late February, prior to the start of the four-month war that created the biggest energy disruption in history, according to the International Energy Agency (IEA).
Market analysts noted that the downward move is being influenced by earlier stranded tankers managing to exit the Gulf, resulting in an increase in oil on water.
Supplies also continued to increase as the United Arab Emirates raised its crude output to near record highs above 3.8 million barrels per day in June after it quit the Organisation of the Petroleum Exporting Countries (OPEC) to escape production caps, while Saudi Arabia slashed its official selling prices
President Donald Trump said on Monday the US would either reach a deal with Iran or “finish the job,” renewing his threat of military action while Iran projects defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei. Indirect US-Iran talks ended last week without any public sign of headway toward a lasting peace.
OPEC and its allies, known as OPEC+, agreed on Sunday to further increase output targets by 188,000 barrels per day from August, on top of similar increases for June and July.
However, these increases have remained largely on paper because of the Iran war, which closed the Strait of Hormuz to tanker traffic for key OPEC producers, including Saudi Arabia, Kuwait and Iraq, capping their output.
In the US, stocks of crude oil are high. Strategic Petroleum Reserve fell by 6.2 million barrels in the week ending July 3 to 319.5 million barrels, the lowest level since April 1983, according to data from the Department of Energy on Monday.
Shipping groups Maersk and Hapag-Lloyd will resume some sailings through the Suez Canal, which accounts for 10 per cent of global trade. The Asia-Europe trade corridor was abandoned by most shippers after attacks in the Red Sea by Yemen’s Houthis during the Gaza war.
