West Texas Intermediate (WTI) crude oil experienced a sharp decline, trading around $69.70 and falling 4.40% on the day, marking its lowest level since March 2, 2024. This drop has erased much of the geopolitical risk premium that had accumulated since the outbreak of the Israel-Iran war, bringing prices closer to pre-conflict levels near $67 [1].
The sell-off was driven by easing concerns over prolonged disruptions to Gulf energy exports. Maritime tracking data indicated an increase in vessel crossings through the Strait of Hormuz, suggesting a gradual normalization of trade flows, although traffic remains below pre-conflict levels [1]. Diplomatic efforts are ongoing, with Qatar and Oman launching an initiative to bring Iran, Gulf states, and Iraq together to establish a long-term framework for managing the strategic waterway. Gulf countries are expected to defend free transit, while Iran may propose fees related to security, navigation, and environmental protection [1].
Bearish sentiment was further reinforced by the US decision to grant a temporary 60-day waiver, allowing international buyers and American refiners to legally resume purchases of Iranian crude oil. This move has increased expectations of higher global oil supply in the coming weeks [1].
However, some analysts believe the sell-off may be overdone. ING analysts note that oil volumes through the Strait of Hormuz remain well below pre-conflict levels, and the oil market continues to show signs of tightening despite improved logistics. TD Securities analysts highlight that floating crude inventories in the Gulf have declined sharply in recent weeks, which could limit the ability to sustain current flow rates over the longer term [1].
Investors are also closely watching negotiations between Washington and Tehran over nuclear inspections. US President Donald Trump stated that Iran had agreed to allow International Atomic Energy Agency (IAEA) inspectors to return, but Iranian officials said no timetable had been established, leaving uncertainty over the durability of the ceasefire agreement [1].
CONCLUSION
WTI oil prices have fallen sharply as Gulf supply fears ease and the US grants a waiver for Iranian crude, raising expectations of increased supply. However, analysts caution that market tightening and declining inventories could limit further downside. Uncertainty remains over the durability of the ceasefire and the outcome of nuclear negotiations.