Oil prices dropped about 5% for a second consecutive day to reach their lowest levels in three months amid emerging details of an interim deal to end the Middle East conflict and reopen the Strait of Hormuz. On June 16, Brent crude futures settled at $78.96 a barrel, down $4.21 or 5.1%, while U.S. West Texas Intermediate (WTI) crude fell $4.70 or 5.8% to close at $76.05, according to livemint.com.
The decline follows news of an agreement that includes allowing Iran to resume oil sales and reopening the strategic Strait of Hormuz, a critical chokepoint for global oil shipments. The U.S.-Iran war, which began on February 28, had previously pushed oil prices higher, with Brent crude closing at $72.48 and WTI at $67.02 on February 27. Bob Yawger, director of energy futures at Mizuho, noted that crude oil prices are falling rapidly on the assumption that the Strait of Hormuz will soon reopen, as reported by livemint.com.
This price movement reflects the market's response to a potential increase in oil supply following the reopening of the Strait of Hormuz, which had been closed due to the conflict. The Strait is a vital route for about a fifth of the world's oil, and its closure had contributed to elevated prices earlier this year. The current prices are the lowest since early March, signaling easing supply concerns and a shift in market sentiment, according to livemint.com.
Brent crude's settlement at $78.96 and WTI's at $76.05 mark the lowest closing prices since March 2 and March 4, respectively. The developments around the Strait of Hormuz and the interim deal to end hostilities are key factors influencing these price levels, as detailed by livemint.com.