West Texas Intermediate (WTI) crude Oil extends its decline on Wednesday, falling more than 3% as stranded crude cargoes in the Strait of Hormuz gradually return to the market following an interim peace agreement between the United States (US) and Iran. At the time of writing, WTI trades around $70.20 per barrel, its lowest level since early March when the US-Iran war began.
WTI has erased almost all of its Middle East war-driven gains as fears of supply disruptions fade, while the US decision to temporarily lift oil sanctions on Iran is expected to bring additional crude supplies to global markets.
US Energy Secretary Chris Wright said on Wednesday, "Roughly 72 ships have exited the Strait of Hormuz in the last 24 hours, amounting to 20 million barrels of oil." Wright also noted that a "return to normalcy in Hormuz will take a few weeks."
Meanwhile, the United States and Iran have yet to reach a final deal. The latest talks made some progress, but disagreements remain over Iran's nuclear program and the future of the Strait of Hormuz.
Tehran has stressed that the Strait of Hormuz is unlikely to return to its pre-war status quo, with Iran and Oman expected to impose toll charges on vessels transiting the waterway.
US President Donald Trump warned on Wednesday that negotiations could collapse if Iran moves ahead with plans to charge tolls.
On the data front, a sharp drop in US crude inventories provided little support to Oil prices. Data from the Energy Information Administration (EIA) showed crude stockpiles fell by 6.088 million barrels last week, compared with expectations for a 5.1 million-barrel decline. However, the drop was smaller than the previous week's 8.262 million-barrel draw.
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