Crude Oil Prices Drop on Increased Traffic Through Strait of Hormuz

Crude oil prices dropped on Thursday due to increased traffic through the Strait of Hormuz. The September WTI crude oil contract closed down -0.87 (-1.03%) and September RBOB gasoline fell by -0.0945 (-2.93%).

The drop in oil prices came after Pakistan's Foreign Ministry announced that negotiations between the US and Iran are ongoing to restore stability, particularly in the Strait of Hormuz. Shipping through the strait has picked up, with 14 commodity vessels transiting it on Wednesday, up from single digits last week.

Tensions remain high in the Middle East as the US maintains its blockade of Iranian oil shipments in the Persian Gulf. OPEC delegates expect to pause oil production hikes at their meeting this Sunday following a final increase of +188,000 bpd in September.

Robust crude supplies in China may reduce Chinese crude purchases in the near term, a bearish factor for oil prices. US crude oil inventories are also below the seasonal 5-year average, and US crude oil production has been unchanged at 13.796 million bpd since July 24.