Crude Oil Prices Plummet Amid US-Iran Diplomatic Breakthrough
US-Iran diplomatic efforts have led to a decrease in crude oil prices on Monday. The September WTI crude oil (CLU26) closed down -6.70 (-7.50%), while the September RBOB gasoline (RBU26) closed down -0.0820 (-2.52%). Gasoline prices fell to a one-week low due to the easing of tensions in the Middle East.
The US and Iran have paused further attacks for a third day, with Iran signaling it would refrain from retaliation as it holds negotiations with Oman over the Strait of Hormuz. However, tensions remain high, particularly as the US maintains its blockade of Iranian oil shipments in the Persian Gulf.
Global crude oil supplies are tightening due to reduced flows through the Strait of Hormuz, which has been effectively shut off by war. Additionally, Russian crude production fell to 8.928 million bpd in June, the lowest in 2.5 years, according to OPEC data.
The strikes on Russian energy infrastructure have plunged refining capacity, leading to a nationwide gasoline shortage and fuel rationing in around 90% of Russian regions. Stronger Russian crude exports are also adding to global oil supplies, which is bearish for prices.