Brent moves lower as Hormuz traffic picks up

The front-month ICE Brent contract has declined by $1.66/bbl on the day, to trade at $75.70/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Brent crude’s price has felt some upward pressure after the American Petroleum Institute (API) reported another decline in crude stocks.

US crude oil inventories recorded a decline of 765,000 bbls in the week ending 19 June, according to the API.

A fall in US crude stockpiles is generally seen as a sign of stronger oil demand and can provide upward support to Brent’s price.

Meanwhile, Strategic Petroleum Reserve (SPR) inventories have declined by another 9.1 million bbls to 331.2 million bbls in the previous week, “the lowest level in more than four decades and nearly 394 million barrels below maximum capacity,” according to Trading Economics.

Downward pressure:

Oil has come under further downward pressure as vessel traffic through the region’s most important chokepoint seem to gradually recover.

US President Donald Trump claimed yesterday that 19 million bbls of oil flowed out of the Strait on Monday.

“Oil prices continue to move lower as flows from the Persian Gulf start to recover,” two analysts from ING Bank noted.

Since the onset of the US-Iran conflict, the Strait of Hormuz has remained largely closed to commercial traffic, first due to Iran’s de facto closure, and subsequently by a US blockade.

“Price action suggests the market is assuming a rapid recovery in traffic through the Strait of Hormuz,” the analysts added.

By Aparupa Mazumder

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