Oil falls below $74 as Hormuz traffic recovers after Iran war
Brent crude, the international benchmark for oil prices, was trading at $73.81 a barrel at 10:40 a.m. EDT, down 4.2% from Tuesday's close.
The price of oil fell below $74 a barrel on Wednesday for the first time since before the US-Israel-Iran war began on Feb. 28 as concerns over disruptions in the Strait of Hormuz continued to ease.
What happened: Brent crude, the international benchmark for oil prices, was trading at $73.81 a barrel at 10:40 a.m. EDT, down 4.2% from Tuesday's close.
West Texas Intermediate crude was down 3.41% at $70.17 a barrel.
Oil prices surged during the conflict after the United States and Israel launched strikes on Iran and Tehran retaliated by targeting US assets, Israel, Gulf states and commercial shipping in the Strait of Hormuz, the strategic waterway between Iran, Oman and the United Arab Emirates.
Why it matters: Brent crude peaked at around $115 a barrel last month amid attacks on shipping in the strait and a US blockade on Iranian ports imposed in April. Roughly one-fifth of global oil and liquefied natural gas shipments normally pass through the waterway.
The decline in prices comes as Iran and the United States continue negotiations on a permanent ceasefire agreement and shipping activity through Hormuz recovers. The two sides signed a memorandum of understanding last week that included provisions to ensure freedom of navigation through the strait.
Maritime traffic has increased since then. According to maritime intelligence firm Kpler, at least 172 vessels have passed through the waterway since the signing of the deal, including 42 ships on Saturday alone.
But the disruption remains significant. According to a report published Wednesday by Allianz, around 1,200 cargo vessels carrying an estimated $125 billion worth of goods remain stranded in the Gulf awaiting safe passage. Allianz said the “unprecedented” closure of the strait raised “concerns about the future of global maritime trade.”
Iran's semi-official ISNA news agency reported Tuesday that the strait was fully open and that large volumes of oil had moved through it in recent days.
The International Maritime Organization said Tuesday that about 11,000 seafarers were seeking to leave the Gulf and that it had established an evacuation corridor in coordination with Oman.
Know more: Safe-haven assets also retreated as geopolitical tensions eased. Gold fell below $4,000 per ounce on Wednesday for the first time since November.
