Oil Prices Plummet to Pre-War Levels as US-Iran Truce Eases Strait of Hormuz Fears

Juliet Oladele, Reporting

OIL prices have crashed to their lowest level since the outbreak of the US-Iran conflict in February, tumbling to $72 per barrel as geopolitical tensions ease and shipping traffic through the strategic Strait of Hormuz resumes.

Brent crude futures for August delivery fell $1.06, or 1.44 per cent, to $72.68 a barrel in early trading, while US West Texas Intermediate dropped 76 cents, or 1.08 per cent, to $69.58 a barrel. The dramatic decline represents a sharp reversal from the $120 per barrel highs witnessed during the height of hostilities.

According to Oilprice.com, crude had already fallen from $76.75 per barrel on Tuesday to $73.50 on Wednesday, before continuing its downward trajectory.

The price collapse follows an initial accord reached last week to end the US-Israeli war with Iran, which began on 28 February. The agreement has allowed for the resumption of traffic through the Strait of Hormuz, a vital chokepoint through which approximately one-fifth of global oil supplies transit.

Rising Middle Eastern supply, coupled with Iran set to boost sales following a reprieve from US sanctions, has driven down prices of physical crude oil cargoes worldwide.

‘World Is a Much Safer Place’

US President Donald Trump took to social media on Tuesday to trumpet the development, claiming a record 19 million barrels of oil flowed through the strait on Monday.

“19 million barrels of oil flowed out of the Hormuz Strait yesterday, an all-time record. Oil prices are tumbling down, and the world is a much safer place,” Trump posted.

The agreement has established 60 days of negotiations to address more complex issues, including Iran’s nuclear programme. Industry analysts remain cautiously optimistic about the stability of the arrangement.

Speaking to Reuters, energy analyst Wright noted that oil would continue to flow through the strait even if the deal were to falter, adding that Iran would be unable to close the strategic waterway again.

Logistics Eased

In a move to further facilitate tanker movements, Oman opened temporary routes on Wednesday to ease departures from the strait, with the International Maritime Organisation coordinating efforts alongside Omani authorities.

Traders are now closely monitoring whether traffic continues to flow smoothly through the strait and whether tensions remain contained across the broader Middle East region.

The price drop will come as welcome relief to consuming nations grappling with inflationary pressures, though it poses fresh challenges for oil-producing economies that had grown accustomed to higher prices during the conflict.