Oil prices declined on Friday as markets reacted to the resumption of tanker traffic through the Strait of Hormuz following the interim peace agreement between the United States and Iran.
Brent crude fell 54 cents, or 0.68%, to $78.31 a barrel, while West Texas Intermediate crude dropped 46 cents, or 0.60%, to $76.14 a barrel. The more actively traded August WTI contract was down 79 cents at $75.06 a barrel.
Both benchmarks hit their lowest levels since early March after several tankers, including three Saudi-flagged vessels carrying a combined six million barrels of crude, passed through the strategic waterway following the signing of the US-Iran agreement.
Analysts expect the deal to release more than 85 million barrels of oil stranded in the Gulf into global markets, while the easing of US sanctions on Iranian oil is also expected to boost supply.
“Traders are still waiting for hard evidence that tanker traffic through the Strait of Hormuz is actually normalising before committing to the next leg lower,” said KCM Chief Market Analyst Tim Waterer.
“Until those ships start moving consistently again, scepticism lingers and keeps a lid on the downside,” he added.