Oil Prices Return to Pre-Conflict Levels Amid Resumption of Strait of Hormuz Traffic
The price of oil has declined to levels not observed since before the Iran war, coinciding with the gradual resumption of traffic through the strategically important Strait of Hormuz shipping route.
Global benchmark Brent crude briefly dipped below $72.48 per barrel, matching the price recorded on 28 February, the day prior to the US and Israel launching attacks on Iran. Subsequently, the price edged up slightly to $72.63.
Energy prices have experienced significant volatility since Iran's response to the strikes involved effectively closing the strait, a vital waterway for oil and gas shipments.
The cost of crude oil has been trending sharply downward since the US and Iran signed a Memorandum of Understanding (MOU) on 17 June. This agreement established a 60-day period for negotiations concerning Tehran's nuclear program and other measures aimed at ending the conflict.
Representatives from both nations convened in Switzerland last weekend for talks intended to resolve the war, which led to the US partially lifting sanctions on Iranian oil exports.
According to maritime intelligence firm Kpler, the number of vessels transiting the Strait of Hormuz has increased significantly since the MOU was signed.
Kpler informed the BBC that ships passing through the waterway in recent days include those transporting crude oil, liquefied natural gas (LNG), fertilizer, and other goods.
Mediators Qatar and Pakistan stated in a joint announcement on Monday that the US and Iran had established a "communication line" to prevent misunderstandings, aiming to ensure the safe passage of commercial vessels through the Strait of Hormuz.
Dimitris Maniatis, chief executive of Marisks, a maritime risk advisory firm assisting ships stranded in the region, noted a "tremendous shift" with a substantial increase in the number of ships utilizing the strait in recent days.
"There has been a 'tremendous shift' with far more ships using the strait in recent days," said Dimitris Maniatis.
Marisks estimates that approximately 80 ships have crossed the Strait of Hormuz since Monday, following the initial round of peace talks between the US and Iran in Switzerland.
Maniatis added that a limited number of ships are permitted to cross a northern passageway with authorization from Iranian authorities.
He also indicated that the US Navy has provided guidance for vessels to navigate a southern route, which is considered safe from mines and other hazards laid during the conflict.
Despite these developments, the volume of ships crossing the strait remains below pre-war levels, when more than 100 ships transited the route daily.
Hundreds of ships continue to appear to be awaiting passage in the Gulf.
