Oil prices slipped in early trading on Thursday after Qatar said indirect talks between Iran and the U.S. had made "positive progress" during negotiations in Doha that concluded on Wednesday. The discussions centred on the Strait of Hormuz, which handles one-fifth of global oil supply.
Crude oil price on July 2
Brent crude futures fell 80 cents, or 1.09%, to $70.80 a barrel, while U.S. West Texas Intermediate crude declined 90 cents, or 1.28%, to $67.75 a barrel. In the previous session, both benchmarks had dropped more than 1%, settling at their lowest levels in four months.
Sources said U.S. and Iranian negotiators spent two days in Doha discussing maritime traffic through the Strait of Hormuz and the unfreezing of Iran's funds.
Although shipping traffic has partly resumed, the two countries exchanged strikes last weekend after Iran attacked a cargo ship. Iran is seeking international recognition of its control over the Strait of Hormuz, even if it has to achieve that by force, Reuters reported.
Tehran has repeatedly said it will begin charging tolls on vessels from mid-August after the toll-free period under the initial agreement comes to an end.
What’s next?
Tanker movement through the strait has started improving, with U.S. Vice President JD Vance said oil flows had returned to pre-war levels, although he did not provide any figures.
Despite the improvement, a complete reopening of the Strait of Hormuz is expected to take time, say experts. It will require coordination of vessel movements, restarting oil wells, repairing damaged infrastructure and agreements on de-mining operations. Some shipowners also remain cautious about operating in the strait and the wider Persian Gulf.
Analysts said global oil inventories were depleted during the prolonged disruption to shipping through the Strait of Hormuz and will take time to rebuild. They added that stockpiles could continue to decline before additional supplies from the Gulf start reaching international markets.
Last month, Saudi Aramco Chief Executive Officer Amin Nasser warned that disruptions in the Strait of Hormuz could delay the return of stability to global oil markets until 2027. He said prolonged interruptions could affect nearly 100 million barrels of oil supply every week. Saudi Aramco is the world's largest oil producer.
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