Oil drops to four-month lows as Hormuz flows recover

Oil prices fell for a third consecutive session on Thursday as crude shipments through the Strait of Hormuz continued to recover and diplomatic progress between the United States and Iran eased fears of prolonged supply disruptions. Brent crude dropped to around $70.33 a barrel while U.S. West Texas Intermediate fell to $67.20, their lowest levels since late February and effectively erasing the geopolitical risk premium built up during the U.S.-Iran conflict.ndtvprofit+1

Hormuz Flows Surge Past 10 Million Barrels Per Day

The sell-off accelerated after a U.S. official confirmed that oil flows through the Strait of Hormuz had climbed to more than 10 million barrels per day, according to Bloomberg, with American military support helping boost commercial shipping through the critical chokepoint. Combined with roughly 5 million barrels per day moving via alternative routes, global energy supplies are now approaching pre-war levels.bloomberg+1

At least five supertankers carrying a total of 10 million barrels of Saudi oil loaded from Ras Tanura have exited the strait, with Saudi Aramco switching to spot pricing to speed up sales in Asia, according to Reuters.detroitnews

The recovery marks a dramatic turnaround from just weeks ago. In early June, Iran declared the strait fully closed and oil traded above $95 a barrel. The June 17 memorandum of understanding between Washington and Tehran, brokered by Qatar and Pakistan, paused fighting and set up 60 days of negotiations toward a permanent peace deal.cnbc+2

Doha Talks Show Progress, But Fragility Remains

Qatar and Pakistan reported "positive progress" after concluding a round of indirect U.S.-Iran talks in Doha on Wednesday, though sources said negotiators made no headway toward a lasting peace agreement. Discussions focused on maritime traffic through Hormuz and unfreezing Iranian assets, with Iran's nuclear program not yet addressed.reuters+1

Iran's Deputy Foreign Minister Kazem Gharibabadi said the two sides agreed to establish a communications channel for reporting violations of the memorandum. President Trump told reporters that "the denuclearization of Iran is moving along well."egyptian-gazette

OPEC+ and Outlook

Markets are also bracing for this weekend's OPEC+ meeting, where the alliance is expected to approve another production hike of roughly 188,000 barrels per day for August — its fifth consecutive increase since April. Brent crude has now fallen roughly 21% since the start of June, its largest monthly decline since March 2020, according to CNBC.cnbc+2

Analysts caution that the outlook remains fragile. Iran's sanctions relief under the memorandum is set to expire on August 16, and the two sides recently exchanged strikes that tested the ceasefire. Iran's military headquarters warned Thursday that any U.S. "miscalculation" in the strait would be met with a "decisive and swift response."aljazeera