U.S. Energy Secretary Chris Wright announced on Wednesday that oil flows through the Strait of Hormuz have nearly returned to pre-war levels, with 20 million barrels passing through in the last 24 hours. The resumption follows an initial agreement to end the U.S.-Israeli conflict with Iran, which began on February 28.
Brent crude prices have fallen below $73 a barrel for the first time since February 27, 2026, marking a 42% drop from the high of $126 per barrel on April 30. Brent crude futures for August delivery decreased by 1.40 cents, or 2%, to $72.40 a barrel, while U.S. West Texas Intermediate crude declined by 1.2 cents, or 1.6%, to $69 a barrel. The decline in prices is attributed to the easing of supply disruption concerns.
The agreement reached last week allows for a 60-day negotiation period to address complex issues, including Iran's nuclear program. Oman has introduced temporary routes to facilitate tanker movements, and Qatar's prime minister has engaged in discussions with Oman on future management of the strait.
“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.”
Chris Wright, U.S. Energy Secretary
Despite the recent decline in oil prices, the complete reopening of the Strait of Hormuz will be a complex process involving coordination of vessel movements, restarting oil wells, and demining operations. Analysts note that global oil inventories, depleted during the disruption, will take time to rebuild.
Saudi Aramco CEO Amin Nasser warned last month that disruptions in the Strait of Hormuz could delay global oil market stability until 2027, potentially affecting nearly 100 million barrels of oil supply weekly.
Background
The Strait of Hormuz is a critical chokepoint for global oil supply, with a significant portion of the world's oil passing through it. The recent conflict had disrupted these flows, impacting global oil prices and supply chains.
As the situation develops, the focus will be on the negotiation outcomes and the pace at which oil supplies can be restored to international markets. The ongoing coordination efforts and geopolitical negotiations will be crucial in determining the future stability of oil prices.
