Crude slips toward $70 as tankers return to Hormuz after US-Iran reach peace deal

Crude oil prices tumbled on Thursday towards pre-war levels as tanker movement through the Strait of Hormuz picked up, easing earlier supply concerns. After surging past $126 per barrel during the Middle East crisis, oil has now fallen sharply, slipping back towards the $70 mark.Around 7 am IST, Brent crude stood at $72.90, down 1.14% while WTI crude was trading at $69.61, down 1.04%.This comes after earlier fall on Wednesday, which touched fresh four-month lows as improved shipping activity through the strategic waterway and expectations of higher Iranian exports reduced fears of supply disruptions.Brent crude futures declined by $1.37, or 1.8%, to $75.71 per barrel, while US West Texas Intermediate (WTI) crude fell by $1.08, or 1.5%, to $72.13 a barrel. Brent hit its lowest level since February 27, and WTI reached its weakest point since early March.The fall comes after a strong rally earlier in the year driven by the Iran conflict and concerns over potential disruptions to shipping through the Strait of Hormuz. “We have the prospect of a big rush ⁠in physical supply out of the Arab Gulf. So we are in a mini glut for now as demand needs to be tempted back,” Neil Crosby, head of research at Sparta Commodities told Reuters.Around 20 million barrels of oil passed through the Strait of Hormuz in the last 24 hours, US energy secretary Chris Wright said, describing the movement as a return to normal flows. Shipping data also showed that three stranded tankers carrying five million barrels of crude were exiting the strait on Wednesday, as an interim deal between Iran and the US helped unlock supplies previously held up in the Gulf.“People are selling the flood of oil coming to ⁠the market from the Middle East, and trying to unload contracts fast. There is a lot of selling in August,” Bob Yawger, director of energy futures at Mizuho told Reuters, referring to the next contract delivery period.Physical crude cargoes were trading at discounts across global markets as trade flows adjusted to rising supply from the Middle East. Iran may also increase sales following a temporary reprieve from US sanctions.This comes after oil prices had stayed elevated since late February when the US and Israel launched joint strikes on Iran. After the attacks, Tehran squeezed tight the Strait of Hormuz, draining oil supplies across the globe and repeatedly pushing prices beyond the $100 per barrel mark.