Market News
Oil Falls as Iran Peace Deal Gets Tankers Moving Through Hormuz - BLOOMBERG
BY Grant Smith, Rong Wei Neo and Nicholas Lua
(Bloomberg) -- Oil futures and retail gasoline prices fell as the US and Iran agreed to end their months-long conflict and reopen the Strait of Hormuz, spurring a flurry of ships to cross the critical chokepoint.
Brent slipped 1.3% to near $78 a barrel in London, briefly touching the lowest since early March and whittling away more war-time gains, after President Donald Trump signed a memorandum of understanding that envisions rapidly reopening the Persian Gulf conduit. Iranian President Masoud Pezeshkian published a copy of the text on social media on Thursday. In the US, gasoline prices dropped below $4 a gallon for the first time since March.
An end to the tensions and the reopening of Hormuz paves the way to restart millions of barrels of oil production shuttered by major exporters like Saudi Arabia, the United Arab Emirates and Iraq — an unprecedented disruption that initially propelled key fuel prices to record levels. With refiners in Asia already comfortably supplied, a wave of cargoes could put further downward pressure on prices, which have lost around 38% since hitting a four-month high in April.
Vessel movements are showing initial glimmers of progress. Four supertankers, including three controlled by Saudi Arabia’s Bahri, were observed leaving through the Strait of Hormuz, along with a ship carrying Qatari liquefied natural gas and a Chinese fuel tanker, ship-tracking data showed. Four Iranian tankers, and two more ships with Iran links, were spotted crossing.
“The probability of Hormuz remaining open is now greater than at any time during the crisis,” said Aldo Spanjer, head of energy strategy at BNP Paribas SA. But “even in a best-case scenario, several months will be needed for oil flows to normalize.”
Iran had declared the Strait of Hormuz closed after the country came under attack by the US and Israel on Feb. 28, effectively shuttering the route for a fifth of the world’s oil. The US also subsequently blockaded the conduit and access to Iranian ports in a bid to ramp up the pressure on the Islamic Republic.
The crisis propelled Brent futures above $126 a barrel in April, the highest level since 2022. But as the diplomatic process gathered momentum, and producers found workarounds to sneak cargoes out of the Gulf, the rally began to dissipate.
