Crude prices sank by about 3% on June 26, heading for steep weekly losses, as concerns about supply eased with more stranded oil tankers exiting the Strait of Hormuz. This occurred despite a cargo vessel being hit near Oman on June 25. Brent crude slid 3.47% to $72.65 a barrel, while US West Texas Intermediate (WTI) fell 3.42% to $69.46 a barrel. Both benchmarks were poised for weekly losses of around 9%.
Contributing to the easing supply concerns, refining giant Saudi Aramco resumed oil loading at its Ras Tanura terminal in the Gulf on June 26, after a nearly four-month halt. Shipping data from LSEG indicated that two Very Large Crude Carriers (VLCCs), each capable of loading two million barrels of oil, were being loaded, with another waiting nearby. This increase in flows, particularly of previously stranded vessels, has led to a general sell-off in the market, according to June Goh, senior oil market analyst at Sparta Commodities.
Conversely, both benchmark contracts had initially jumped more than 2% on June 25 following a Singapore-flagged cargo vessel being struck by an unknown projectile near Oman. This incident prompted the UN's shipping agency to suspend its voluntary evacuation scheme. Two US officials informed Reuters that Iran was responsible for the attack, as the vessel attempted to pass through the strait, while Iranian authorities stated that the security of vessels outside designated Hormuz routes was not guaranteed.
Crude shipments through the Strait of Hormuz increased this week to their highest level since the US-Israeli conflict with Iran began in February, thanks to a ceasefire deal that reopened the waterway. This rise, however, largely reflects the movement of previously stranded vessels, and overall traffic remains a fraction of the daily average of 125 ships seen before the conflict. ING analysts noted that once these stranded vessels have cleared, a potential pullback in flows could occur. Meanwhile, preliminary assessments of Venezuela’s oil infrastructure after recent earthquakes showed limited damage, though power outages raise doubts about maintaining pre-earthquake output levels of approximately 1.2 million barrels per day.
