Oil prices have extended their decline and are now close to erasing their wartime price gains, with Brent crude futures for August delivery falling 40 cents, or 0.54%, to $73.34 per barrel and US West Texas Intermediate (WTI) crude declining 27 cents, or 0.38%, to $70.07 per barrel as of 0004 GMT on Thursday, according to Business Standard. The latest decline follows a sharp 4% drop in the previous session, leaving Brent less than 50 cents above its closing price before the US-Iran conflict began. Brent had fallen more than $3 on Wednesday as supply concerns eased, while WTI settled down nearly $3. August Brent was trading lower than September, which was priced at $73.59, signalling ample short-term supply availability. Brent crude has slipped below $73 a barrel for the first time since February 27, 2026, and is down 42% from its peak of $126 per barrel reached on April 30. Brent hit its lowest level since February 27, and WTI reached its weakest point since early March, as reported by The Times of India. Brent's prompt timespread — a widely watched metric by the market — flipped into a bearish contango structure, signaling that near-term prices are falling below longer-term contracts. Dated Brent, the most important physical oil benchmark, topped $140 to reach a record high during the conflict, but has since retreated significantly. The retreat comes as traders increasingly unwind the geopolitical risk premium that had driven oil prices sharply higher earlier this year, with improving supply conditions and optimism over a potential US-Iran peace agreement continuing to weigh on the market.
Recent tanker movements continue to suggest gradual normalization of traffic through the Strait of Hormuz, with U.S. Energy Secretary Chris Wright stating on Wednesday that flows through the Strait of Hormuz were close to what they were before the start of the Iran war, saying at least 20 million barrels had exited the strait in the last 24 hours, according to The Hindu BusinessLine. Wright told the Reuters Global Energy Forum in New York that roughly 72 ships exited the strait in the last 24 hours, with 20 million barrels of crude oil, amounting to around a fifth of world consumption. He added that normal flows are present today, with oil shipments continuing even if the initial deal to end the conflict were to break down. Wright explained that many of the vessels exiting the strait were avoiding the main channel due to fear of mines, and instead passing close to the Iranian coast or along the southern route near Oman, with military escorts. The number of ships is lower than usual, but many are bigger, he noted. To return to complete normalcy takes a demining of the strait, probably a few weeks' effort, Wright stated. An Iranian military source told Fars news agency that a limited number of vessels are being allowed to pass through the strait each day under coordination with Iran's Revolutionary Guards Navy. The International Maritime Organization has also received safety guarantees allowing hundreds of ships to exit the Persian Gulf, with the U.N. shipping agency saying an evacuation plan to enable hundreds of ships with 11,000 seafarers stranded in the Gulf to sail through the strait is underway after the US-Israeli ceasefire deal. Separately, Oman on Wednesday opened temporary routes to ease tanker departures from the Strait of Hormuz, with the International Maritime Organization and Omani authorities coordinating vessel movements. Qatar's prime minister visited Oman for talks on initiating negotiations over the strait's future management with Iran, Iraq and Gulf states. Shipping activity through the Strait of Hormuz appears to be improving, with more vessels keeping satellite tracking systems active, which points to better confidence among shipowners and operators. According to ING commodity strategists, recent increases in vessel crossings have improved market confidence, even though traffic remains below levels seen before the conflict.
Washington and Tehran have both flagged early progress in talks to end the war that began in late February, with US President Donald Trump announcing on Tuesday that Iran has 'fully and completely' agreed to highest level nuclear inspections long into the future, according to a Truth Social post. Trump stated that 'If they did not agree to this, there would be no further negotiations! Based on this and other major concessions being made by Iran, I have agreed to allow the Hormuz Strait to remain OPEN, with no further Naval Blockade.' This follows Oman and Iran agreeing to continue discussions on the future administration of navigation through the Strait of Hormuz on Tuesday, according to The Economic Times. However, negotiations are likely to be protracted and claims from the two sides have diverged, with US Secretary of State Marco Rubio stating that any attempt by Iran to impose transit fees would be in violation of international law, while US President Donald Trump said on Tuesday that Iran had agreed to allow nuclear inspections 'into infinity,' a claim Tehran disputed. Iran and Oman have also started work on an arrangement linked to the administration of the Strait of Hormuz, including discussions about transit charges at a time when markets remain alert to the risk of additional fees or tighter controls by Tehran. The initial accord last week to end the US-Israeli war with Iran, which began on February 28, has allowed traffic through the strait to restart, with Wright noting that oil shipments would continue through the strait even if the agreement were to break down, adding that Iran would not be able to shut the waterway again, saying that Iran's military was depleted. The accord set up a 60-day period of negotiations to tackle more difficult issues including Iran's nuclear program. Wright also noted that Iran will not have the ability to close the Strait of Hormuz going forward, taking away their key leverage, saying that Iran's military was depleted.
The Indian oil basket, comprising sweet-grade Brent dated and sour-grade Oman and Dubai average crude, was priced at $74.34 a barrel, representing less than half its peak level during the conflict, as reported by The Times of India. This compares to the pre-conflict levels of $65-70 per barrel that both Brent and the Indian oil basket averaged in the run-up to the US-Iran conflict that broke out on February 28. At the peak of the conflict, Brent rose to nearly $114 a barrel, while the Indian basket touched $150 due to a surge in West Asian crude prices, spot purchases by Indian refiners at high premiums, and increased freight and insurance costs. The Indian crude basket composition shifted significantly from 78.71% sour crude (Oman and Dubai average) and 21.21% Brent dated during 2025-26 through February, to 38.98% and 61.02%, respectively, in March as refiners diversified sourcing after West Asia supplies were disrupted. A senior refinery executive noted that Brent futures reflect crude deliveries over a longer timeframe, while the Indian oil basket captures the actual prices paid for cargo, according to The Times of India.
Despite recent declines, oil prices remain highly volatile and subject to significant movement in case of any potential disruption in the Strait of Hormuz or impact on the US-Iran peace deal. Oil prices have dropped by more than one-third from levels reached during the peak of the conflict, driven in part by expectations of an impending increase in crude supply. The decline has been supported by expectations that more crude could return to the market, as part of the diplomatic process, the United States has temporarily permitted purchases of Iranian oil, enabling exporters to reconnect with major Asian refiners. Additional supply could also come from Iran after the US granted a temporary waiver allowing purchases of Iranian oil that had already been loaded before sanctions relief discussions began, although financing and insurance-related hurdles continue to limit broader exports. Global crude supplies are beginning to recover with buyers being offered more cargoes from producers across the Middle East and Africa, easing concerns over availability that had dominated markets during the conflict. Analysts note that global oil inventories were depleted during the extended disruption of shipping through the Strait of Hormuz and will take time to rebuild, with stockpiles could continue falling before fresh Gulf supplies begin reaching international markets. Crude oil prices are likely to remain in the $70–$85 per barrel range during July and August, with oil prices likely to find support around $62–$65 per barrel and I do not see any signs of prices falling below the $60 level, as per Kedia Advisory's Ajay Kedia. Saudi Aramco CEO Amin Nasser cautioned last month that disruptions in the Strait of Hormuz could delay a return to stability in global oil markets until 2027, noting that prolonged interruptions could affect nearly 100 million barrels of oil supply each week.
