Oil Prices Decline on US-Hormuz Supply Rebound

Oil prices declined on Thursday after surging almost 4% on Wednesday as the US suggested that major volumes are getting through the Strait of Hormuz. Global benchmark Brent dropped towards $102 a barrel, while West Texas Intermediate was near $91.

US Treasury Secretary Scott Bessent told Fox News that 17 million barrels 'sometimes' transited Hormuz per day, although other market watchers have flagged lower figures, with Clarksons Research putting the daily volume at about 8 million barrels earlier this month.

Traders are also awaiting further details from Saudi Arabia on plans to restart oil exports via its critical East-West pipeline. The cross-country conduit, which was damaged in attacks earlier this month, feeds the kingdom's Red Sea coast and has been a vital workaround to shipping cargoes via Hormuz amid sustained threats to shipping during the war.

'Oil is falling because the market is unwinding part of its geopolitical risk premium as gulf supply recovers and hopes of a US-Iran diplomatic breakthrough grow,' said Priyanka Sachdeva, head of market insights at Phillip Nova Pte Ltd. 'But the physical market is nowhere near fully normalized, so the downside is still highly headline-sensitive.'

American Petroleum Institute President and CEO Mike Sommers warns that restricting US diesel exports could force refiners to cut production, potentially lowering diesel prices temporarily while driving up the cost of gasoline and jet fuel.