US-Iran Diplomacy Weighs on Crude Oil Prices Amid Tanker Traffic Uptick
Crude oil prices declined on Wednesday due to ongoing US-Iran negotiations and increased oil tanker traffic through the Strait of Hormuz. The September WTI crude oil (CLU26) price dropped by -0.19%, while the September RBOB gasoline (RBU26) price fell by -2.29%. This downtrend was triggered by Pakistan's Foreign Ministry announcement that US-Iran talks are 'ongoing' to restore stability, particularly in the Strait of Hormuz.
The US Central Command stated that American forces launched airstrikes against dozens of military targets in Iran aimed at degrading its ability to threaten US troops. In response, Iran retaliated by launching drones and missiles into Kuwait and Jordan. Diplomatic efforts to reopen the Strait of Hormuz appear stalled, with Iranian Deputy Foreign Minister Gharibabadi rejecting Oman's proposal for a route through the strait.
Additionally, robust crude supplies in China may reduce Chinese crude purchases in the near term, acting as a bearish factor for oil prices. According to data from Kpler, China's crude inventories remain abundant, with supplies falling by only 54 million bbl since early May to around 1.2 billion bbl.
On the other hand, Ukrainian drone attacks on Russian oil infrastructure have provided support to crude prices. Russia's crude production fell to 8.928 million bpd in June, the lowest in 2.5 years, according to OPEC data. According to EA Analytics, Russian crude-processing rates will average 3.51 million bpd in July, the lowest in 24 years, due to damage caused by drone and missile attacks from Ukraine.