Oil prices slipped Friday, a decline global economists welcomed as the Strait of Hormuz opened for trade following the signing of the US-Iran agreement. Global benchmarks touched their lowest since March 6th as several tankers, including three Saudi-flagged vessels with 6 million barrels of crude onboard, sailed through the strait.
Brent crude slipped toward $79 a barrel and is down more than 9% for the week. West Texas Intermediate for August was trading near $76 a barrel. This comes as tankers were seen crossing the waterways on Thursday heading towards their destination. The US Central Command said it had lifted restrictions on traffic to and from Iranian ports and coastal areas. Separately, the Joint Maritime Information Center advised vessels transiting the strait to follow a route closer to Oman’s coastline to reduce the risk from mines.
According to experts, the deal would pave way for more than 85 million barrels of oil stranded in the Middle East Gulf into global markets. Besides, the agreement has also lifted the sanctions on Iranian oil thereby improving supply to the global market.
Kuwait Petroleum Corp said on Thursday that all force majeure notices issued during the war have been lifted with immediate effect. Further, Iraq all informed to resume production at its oil fields asserting the return to normal output levels will take place gradually until previous production rates are restored.
Despite the opening of the strategic waterways, pre-war operations is a complex process. Vessels need to maintain a carefully coordinated move as the demining of the channel is yet to be done. Some ship owners also remain wary of operating conditions in the strait and the wider Persian Gulf.