Why oil prices plunged below $75 as Strait of Hormuz shipping began to recover
Oil prices fell after Treasury Secretary Scott Bessent announced a 60-day waiver on sanctions targeting Iranian crude purchase
On Monday, US crude prices fell 2.7% to about $74 per barrel following a significant announcement by Treasury Secretary Scott Bessent regarding a 60-day waiver of sanctions on the purchase of Iranian oil. This marks the first time crude prices have plunged below $75 since March.
It has been observed that International Brent crude prices fell 4% to about $77 per barrel since the geopolitical tensions began. It has been observed that both prices remain above their pre-crisis levels of $62 and $68 barrel.
The positive business sentiments in markets could still develop in the markets as negotiations over the strait progress and the broader regional geopolitical stance secured. On Saturday, Iran warned to close the strait again over escalating Israeli strikes in Lebanon.
According to a report released by an international data group, ship traffic through the Strait of Hormuz began to recover this weekend, but volumes remain significantly below prewar levels.
The disruption of shipping traffic through the Strait of Hormuz has been a prime focus since the start of the Iran war.
In line with Kpler data, 17 crossings occurred Sunday, 35 on Saturday and 19 on Friday. This implies that most ships continued to use routes designated by Iran or they deactivated their signals while transiting the waterway.
Kpler clarified in a statement: “The key point is not the traffic stopped, but that traffic continued while using less standard routing.”
Nonetheless, the prices of other primary goods are also returning to prewar levels. The commodity market indicated that the price of urea-a crucial ingredient for fertilizer-has tumbled 50% from its April peak.
