Crude Oil Prices Sink Amid Easing Tensions in the Middle East

Crude oil prices declined sharply on Monday as tensions in the Middle East eased following President Trump's call-off of planned strikes on Iran. The September WTI crude oil (CLU26) closed down -4.33 (-5.11%) and September RBOB gasoline (RBU26) closed down -0.1475 (-4.74%).

The easing of tensions was attributed to progress made in negotiations between Oman and Iran to get more ships moving through the Strait of Hormuz, as well as a call between Saudi Arabia's Crown Prince Mohammed bin Salman and President Trump over the weekend.

However, robust crude supplies in China may reduce Chinese crude purchases in the near term, posing a bearish factor for oil prices. Additionally, Russian crude production has been impacted by drone attacks from Ukraine, with Russian crude processing rates averaging 3.51 million bpd in July, the lowest in 24 years.

OPEC delegates approved their final increase of +188,000 bpd in crude production for September, but this may prove difficult to achieve amid renewed US-Iran military tensions in the region.