The Iranian Islamic Revolutionary Guards Corps (IRGC) announced that safe transit through the Strait of Hormuz is only possible via routes designated by Iran, emphasizing that coordination with the IRGC Navy on channel 16 is mandatory for vessels passing through the strait. The IRGC warned that any new shipping routes announced without Iran’s coordination are unacceptable and dangerous, and vessels violating transit instructions will face action [1]. Despite these headlines, West Texas Intermediate (WTI) oil prices remained largely unaffected, with WTI trading near $69 per barrel, down nearly 1% and almost back to pre-war levels [1].
Meanwhile, WTI oil price gained ground to trade around $69.90 per barrel during Asian hours on Thursday, snapping a three-day losing streak [2]. Crude oil prices faced downward pressure as breakthrough progress in US-Iran peace efforts significantly improved the global crude supply outlook. Growing diplomatic confidence has eased shipping anxieties, encouraging more oil tankers to transit the Strait of Hormuz with their tracking signals turned on [2]. US Energy Secretary Chris Wright stated at the Reuters Global Energy Forum that roughly 20 million barrels of oil exited the Strait within a 24-hour window, marking a return to normal operational flows. Shipping data confirmed that three previously stranded tankers carrying 5 million barrels of crude exited the Gulf on Wednesday due to an interim deal [2].
Additionally, a temporary US waiver allowing the purchase of already-loaded Iranian oil is expected to inject more supply into the market. This influx of actual and anticipated oil has triggered a rapid sell-off in the futures market. Bob Yawger, director of energy futures at Mizuho, noted that traders are aggressively selling off the impending flood of Middle Eastern oil, particularly for the upcoming August contract delivery period, as participants adjust to the reality of higher supplies [2].
According to [1], the market reaction to the IRGC's announcement was muted, with WTI prices remaining stable. However, [2] reports that the improved supply outlook and increased shipments have led to aggressive selling in the futures market, indicating that traders are responding to the anticipated rise in oil supply.
CONCLUSION
WTI oil prices have remained stable despite heightened Iranian control over Strait of Hormuz transit routes and increased US-Iran diplomatic activity. The market is adjusting to a surge in oil supply, with traders actively selling futures contracts in anticipation of higher volumes. Overall, the event has led to a medium market impact, with sentiment slightly positive due to improved supply outlook.