Oil prices have fallen to levels last seen before the US and Israel launched missile strikes on Iran in February, as more tankers exit the strategic Strait of Hormuz. Brent crude dropped to $72.24 a barrel on Thursday, slightly below the price recorded on the eve of the 28 February attacks. Prices have tumbled more than 20% this month.
The decline reflects easing supply fears, with Brent crude for August delivery trading lower than the September contract, indicating ample near-term supply. Vessel traffic through the Strait of Hormuz doubled in the past 24 hours, reaching its highest since late February, according to CNN and MarineTraffic data. Ipek Ozkardeskaya, senior analyst at Swissquote, said the return of ships with active satellite signals helped push prices down, alongside strategic inventory releases and weak demand from China.
UK motorists are set to benefit, with the RAC predicting petrol prices could fall below 150p a litre and diesel below 160p in the coming days. Simon Williams, RAC spokesperson, urged retailers to pass on wholesale savings to drivers. Bank of England Governor Andrew Bailey welcomed the easing tensions, noting a sharp fall in energy prices this week.
However, geopolitical risks persist. Israel carried out its first airstrike in Lebanon since a ceasefire took effect on Saturday, killing two people. Meanwhile, tensions remain between Iran and the US over an interim accord. Susannah Streeter of Wealth Club cautioned that while oil markets are calming, Europe faces a separate energy shock from a punishing heatwave driving up electricity prices.
Analysts expect oil prices to swing between $60 and $80 a barrel in coming weeks, with factors such as China returning to the market and countries replenishing strategic reserves likely to absorb some supply.
