Oil Hits Lowest Levels Since Iran War as Hormuz Reopens


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude prices hit their lowest levels on Thursday 
(6/18) since the start of this year's Middle East conflict, after the U.S. and 
Iran signed a remote agreement to permanently end active military hostilities 
between them and reopen shipping to oil and gas tankers on the Strait of Hormuz.

   By 9:10 a.m. ET, NYMEX WTI for July delivery was down $2.39, or 3%, to 
$74.40 bbl after dropping to as low as $74.13.  Front-month WTI was at around 
$67 bbl just before the start of U.S.-Israeli bombings against Iran on February 
28 and peaked at $ 117.63 by March.

   ICE Brent for August delivery slid by $1.65, or 2.1%, to $77.90 bbl, after 
tumbling to $77.10. Front-month Brent traded at around $72 bbl on the eve of 
the attacks on Iran and rose to as high as $126.41 by April.

   Among refined products, NYMEX ULSD futures for July dropped by $0.0975 to 
$3.0971 gallon, while NYMEX RBOB for July retreated by $0.0058 to $2.9096 
gallon.

   The US dollar index rose by 0.599 points to 100.465 against a basket of 
foreign currencies.

   Analysts noted that energy traders were aggressively pricing in an 
accelerated return of Iranian barrels to the market after the 14-point 
memorandum of understanding signed between Iran and the U.S. on Wednesday 
(6/17).

   The preliminary accord guarantees immediate toll-free transit through the 
Strait of Hormuz chokepoint for at least two months. Iran has indicated that it 
may charge vessels a service fee after the initial free period.

   Prior to the deal on Wednesday, the Hormuz remained largely impassable over 
3-1/2 months to approximately 20 million bpd of petroleum liquids and liquefied 
natural gas.

   Goldman Sachs said it expects regional crude exports to fully normalize by 
the end of July, supported by a 13 million bpd surge in transit flows. It 
projected Iranian production to achieve a complete structural recovery by 
October, though subsequent inventory restocking could limit further steep price 
declines.

   Highlighting ongoing supply losses elsewhere, BNP Paribas viewed $75 bbl for 
Brent as a durable price floor for the foreseeable future compared to pre-war 
trading ranges.

   Long-term demand headwinds also weighed on sentiment as PetroChina forecast 
China's total 2026 crude consumption to drop 4.9% to 753 million metric tons.

   Notwithstanding the anticipated relief to Middle East supplies, ongoing 
structural disruptions to global refining capacity continued as Ukrainian 
long-range drones successfully struck a major oil refinery in the Russian 
capital.




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