Oil prices fell Tuesday after U.S. Energy Secretary Chris Wright said ship traffic through the Strait of Hormuz is increasing.
Oil prices fell sharply Tuesday after U.S. Energy Secretary Chris Wright said ship traffic through the Strait of Hormuz is increasing, offering a potentially important signal for a market watching one of the world’s most sensitive energy chokepoints.
U.S. crude futures were down about 3.7% at $87.89 a barrel by 10:42 a.m. ET, while Brent, the international benchmark, dropped 3.19% to $91.24, according to the captured CNBC report.
Wright said in an interview with CNBC’s Brian Sullivan at the Atlantic Council Global Energy Forum that traffic through Hormuz is “rising very meaningfully” and that oil exports through the strait are rising and “will continue to rise.” He did not provide specific data on how much flows have increased.
The comments came as President Donald Trump has repeatedly said an agreement with Tehran to reopen Hormuz is close. On Monday, Trump said a deal could come in “two or three days,” but no such agreement has materialized.
The Strait of Hormuz has been under intense focus after the U.S. and Israel attacked Iran on Feb. 28, followed by Tehran’s retaliation against tankers in the waterway and mining of the sea lane. Traffic through Hormuz has fallen sharply since then, and oil prices have risen about 30% over that period.
The U.S. Navy has quietly coordinated with some ships trying to exit the Persian Gulf, according to the report. JPMorgan analysts wrote in a June 4 note that more oil may be moving through Hormuz than is publicly visible, estimating that about 2 million barrels per day could be leaving on tankers with transponders switched off.
The market also remains sensitive to the latest Iran-Israel violence. Iran and Israel exchanged fire earlier this week, putting pressure on a fragile ceasefire implemented in April. The strikes briefly pushed oil prices higher Monday, but both countries have since said they have ceased fire, and the exchange appeared to have ended without further escalation for now.
Analysts and oil industry executives cited in the report said global stockpiles have helped keep prices more moderate than the scale of the disruption might suggest. They warned, however, that prices could rise later this year if inventories decline as summer demand peaks.
For now, traders are watching whether increased Hormuz traffic can be confirmed and whether Trump’s stated push for a deal with Tehran produces an actual reopening agreement.
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