Oil Prices Rebound Fades as Tankers Keep Flowing Through Conflict Zones
Oil prices retreated on Thursday as tanker traffic continued to flow through conflict zones in the Middle East, despite escalating tensions between Iran and the US. Brent futures dropped $1.29, or 1.42%, to $89.45 a barrel, while US West Texas Intermediate (WTI) crude fell 56 cents, or 0.66%, to $83.90 a barrel.
The previous session saw Brent surge by 7.91% and WTI rise by 6.56% in one of the sharpest spikes since the Iran war began. However, tanker traffic has been steadily increasing, with 39 commodity ships passing through the Bab el-Mandeb strait into the Red Sea on Tuesday, the highest number since July 19.
'While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored,' said IG market analyst Tony Sycamore. The longer this situation persists, 'the more these alternative routes and methods will erode Iran's leverage over the Strait of Hormuz.'