Oil Prices Fall as Hormuz Transit Drops to Three Vessels

Oil prices fell at the start of Thursday’s trading, extending losses from the previous session. Brent crude futures dropped $1.24, or 1.2%, to $104.59 per barrel. West Texas Intermediate (WTI) futures declined $1.14, or 1.1%, to $101.29 per barrel. Both contracts lost approximately $3 on Wednesday.

Strait of Hormuz vessel count falls sharply

Preliminary ship-tracking data released Thursday by Reuters showed that only three cargo vessels passed through the Strait of Hormuz on Wednesday—down from 12 the day before. That figure is significantly below the 10-day average of about 17 vessels. The data excludes any ships that may have transited the waterway with their automatic identification systems (AIS) turned off to avoid detection.

Analyst cites reduced supply concerns and diplomatic expectations

Hirohiko Kikukawa, chief analyst at Nissan Securities Investment, stated: “Concerns over tight supply have eased slightly following news that Saudi Arabia will export shipments via Oman.” He added: “Expectations of progress toward de-escalating tensions in the Middle East ahead of next week’s U.S.-China summit are also limiting price gains.”

Earlier rebound and record highs

On Tuesday, oil prices rose more than 2%. Brent crude futures gained $2.50, or 2.37%, to $108.18 per barrel as of 0813 GMT. WTI futures increased $2.46, or 2.43%, to $103.85 per barrel. Earlier in the week, crude prices reached their highest level in nearly four months.

U.S. inventory draw smaller than expected

The U.S. Energy Information Administration reported Wednesday that American crude oil inventories declined by less than anticipated in the prior week. Crude stockpiles fell by 640,000 barrels, compared with energy market analysts’ Reuters survey forecast of a 1.62-million-barrel drop.