Brent crude for August delivery dropped $1.22, or 1.65%, to $72.52 a barrel, while US West Texas Intermediate (WTI) crude fell $1.02, or 1.45%, to $69.32 a barrel. Both benchmarks reached their lowest levels since February 27.
Market sentiment improved after concerns over supply disruptions eased following a temporary agreement that ended hostilities between Iran, the United States and Israel. The accord has allowed oil shipments through the Strait of Hormuz to resume, reducing fears of prolonged disruptions to global energy supplies.
US Energy Secretary Chris Wright said oil flows through the Strait of Hormuz were nearing pre-war levels, with more than 20 million barrels passing through the vital waterway in the last 24 hours. He added that full normalisation could take several weeks as demining operations continue.
Analysts said markets are increasingly pricing in a faster return of Middle Eastern oil exports than previously expected. Increased regional supply and expectations that Iran could boost oil sales under a temporary easing of sanctions have also pressured prices.
The decline came despite US government data showing crude oil inventories fell to their lowest level since 1984, as traders remained focused on developments in the Strait of Hormuz and regional supply conditions.
Analysts at Macquarie forecast Brent crude to average $67 per barrel and WTI $62 per barrel during the third quarter, as supply chains adjust and shipping routes continue to normalise.
