Oil Prices Drop Further as Rising Tanker Traffic in Hormuz Follows Peace Negotiations

Oil prices have continued their downward trend as more vessels navigate the Strait of Hormuz, coinciding with reports of progress in resolving tensions between the US and Iran.

Brent crude has fallen to around $76 a barrel following a 1.1% decline in the previous trading session, while West Texas Intermediate is trading below $73. Tankers are currently operating in the waterway, with active satellite signals indicating renewed confidence among shipowners. The International Maritime Organisation has confirmed receipt of safety guarantees, allowing hundreds of ships to depart the Persian Gulf.

Both Washington and Tehran have acknowledged initial progress in talks aimed at ending the conflict that reignited in late February. However, the negotiations are expected to be drawn out, as both sides continue to present differing claims. Iran and Oman have initiated discussions regarding a governance framework for Hormuz, which encompasses concerns over transit fees and the potential imposition of charges from the Islamic Republic.

“It seems the market is bracing for the last optimists to concede, leading us to find stability around $75,” noted Carl Larry, an oil and gas analyst at Enverus. “There are numerous uncertainties ahead: supply replacements, loading times, and China’s re-entry into the market.”

The Republican majority in the Senate voted on Tuesday to officially end the US conflict with Iran, marking a rare symbolic check on President Donald Trump. While the resolution is unlikely to shift the administration’s strategy, it highlights the waning domestic support for the initiative.

In a separate declaration, Trump mentioned through social media that he has instructed the Department of Justice to investigate why gasoline prices are not dropping more swiftly despite lower oil prices. Currently, the national average retail price has plummeted 14% since late May, now below $4 a gallon, although it still surpasses the five-year seasonal average according to the American Automobile Association.

Prices:
Brent for August delivery fell 0.8% to $76.48 a barrel at 12:32 p.m. in Singapore. WTI for August delivery also dropped 0.8% to $72.64 a barrel.

Oil futures have retreated by over a third from their wartime peaks, primarily driven by expectations of an imminent increase in crude supply. The US has temporarily allowed Iranian oil purchases as part of diplomatic efforts, which has benefitted sellers in their outreach to Asia’s largest refiners.

As market conditions rapidly deteriorate, the price difference between Brent’s two nearest contracts has narrowed to 22 cents a barrel in backwardation on Wednesday, in stark contrast to nearly $10 in early April.

Producers in the Persian Gulf, including the United Arab Emirates, are swiftly working to restore their export levels. The International Energy Agency reports that the UAE has returned to nearly 85% of pre-war production. Kuwait has lifted its force majeure provisions, and Iraq is increasingly ramping up output.

Nonetheless, signs of tighter markets persist in some regions, particularly in the US. The American Petroleum Institute reported a drop of 1 million barrels in crude inventories at the crucial storage hub in Cushing, Oklahoma, according to a document reviewed by Bloomberg. If confirmed by official data later Wednesday, stockpiles will have fallen below the 20-million-barrel threshold deemed the minimum operational level.

© 2026 Bloomberg