Global oil prices declined on Friday as signs of improving crude supply emerged following the interim peace agreement between the United States and Iran, raising hopes of a return to normal shipping operations through the strategically vital Strait of Hormuz. Brent crude futures fell by 54 cents, or 0.68 per cent, to $78.31 per barrel, while US West Texas Intermediate (WTI) crude dropped 46 cents, or 0.60 per cent, to $76.14 per barrel. The more actively traded August WTI contract also declined, falling 79 cents to $75.06 per barrel.
The decline came after several oil tankers successfully passed through the Strait of Hormuz, one of the world’s most important energy transit routes, just hours after US President Donald Trump signed an interim agreement with Iran aimed at ending hostilities between the two countries. Among the vessels moving through the strait were three Saudi-flagged tankers carrying approximately six million barrels of crude oil. The development reassured markets that oil exports from the Gulf region could soon return to normal levels.
Analysts estimate that the agreement could unlock more than 85 million barrels of oil that had been stranded in the Middle East during the conflict. The deal also includes the easing of US sanctions on Iranian oil exports, potentially increasing global crude supplies in the coming months.
Market analysts, however, remain cautious. Tim Waterer, Chief Market Analyst at KCM Trade, noted that traders are waiting for consistent evidence that tanker traffic through the Strait of Hormuz has fully normalised before expecting further declines in oil prices.
“Until ships begin moving regularly through the route again, some uncertainty will remain in the market,” he said. Before the conflict disrupted regional trade, nearly 20 per cent of the world’s oil and liquefied natural gas shipments passed through the Strait of Hormuz. If the US-Iran agreement holds, energy experts believe global trade flows could gradually return to pre-conflict levels.
Oil-producing nations in the region have already begun preparing for a return to normal operations. Kuwait Petroleum Corporation announced that it had lifted all force majeure declarations imposed during the conflict, signalling confidence in improving conditions.
Meanwhile, Iraq’s Oil Minister, Basim Mohammed, stated that the country’s oilfields are ready to resume full production. Iraqi authorities plan to gradually restore output to levels seen before the conflict.
Despite the positive market reaction, concerns remain about broader regional stability. Israel’s ongoing military operations against Hezbollah in Lebanon have raised questions about the long-term durability of the US-Iran peace arrangement. For now, however, easing geopolitical tensions and expectations of increased oil supplies have helped push crude prices lower, offering relief to energy-importing nations and global markets.
