Hormuz Tensions Ease, Oil Prices Fall 5% as War Risk Premium Decreases
Oil prices have been on a downward trend this week due to decreased risk premium as tensions in the Strait of Hormuz ease. The news has led to a 5% drop in oil prices, with WTI falling below $84.61 resistance and Brent testing $90.12 support.
The Strait of Hormuz, a critical waterway for global crude exports, has been producing headlines due to increased diplomatic efforts between Oman and Iran. The creation of a shipping corridor is being considered as an alternative to the traditional route through the strait. Seven vessels passed through the strait on Thursday, down from 17 the day before.
Goldman Sachs estimates that total Gulf exports currently stand at around 15-16 million barrels per day, still below pre-war levels and above the March low. However, the premium for oil due to war risk has decreased with the increased diplomatic efforts.