Oil Prices Plummet to Pre-War Levels Amid Rising Middle Eastern Supply

Oil prices have plummeted to levels not seen since before the Iran war, driven by rising supply from the Middle East and expectations of increased production. The Brent crude futures contract for August delivery fell $1.08 or 1.46% to $72.66 a barrel while U.S. West Texas Intermediate lost 84 cents or 1.19% to $69.50 a barrel, hitting their lowest since February 27.

U.S. Energy Secretary Chris Wright stated that flows through the Strait of Hormuz are close to those before the Iran war, with at least 20 million barrels having exited the strait in the last 24 hours. However, it may take several weeks for complete normalcy to be restored due to the need for demining and shipping confidence to return.

Goldman Sachs predicted that there will not be a significant increase in Iranian production, even if sanctions relief extends beyond August 21. Iraq is considering all available options if its OPEC quota is not raised and has weighed leaving the producer group.