Oil gains after sell-off, awaits progress on Strait of Hormuz flows

[BENGALURU] Oil prices rebounded on Tuesday (Jun 23) after a sharp fall the previous session supported by tempered optimism over US-Iran peace talks, while investors awaited clearer signs of progress in restoring crude flows through the Strait of Hormuz.

Brent crude futures gained 24 US cents, or 0.38 per cent, to US$78.15 a barrel and US West Texas Intermediate rose to US$74.19 a barrel, up 33 US cents, or 0.46 per cent, as at 8.26 Singapore time.

Prices fell more than 3 per cent on Monday after the United States granted Iran a 60-day sanctions waiver following initial peace talks, and as officials reported a lull in hostilities in Lebanon under the broader agreement.

The developments followed a weekend that had appeared to put the week-old accord in jeopardy, including threats from US President Donald Trump to restart the war if Iran disrupted shipping through the Strait of Hormuz after Teheran declared the strategic waterway closed.

“There remains a prevailing dose of market scepticism, rooted in deep-seated mistrust between Washington and Teheran, suggesting that any return to pre-war oil prices is likely to be delayed rather than immediate,” said Tim Waterer, chief market analyst at KCM Trade.

Trump said in a post on Truth Social on Monday that Iran will agree to have weapons inspections to ensure “nuclear honesty”.

“If Iran does not live up to their agreement, or if they are not behaving, I will do what I have to do,” Trump later told reporters.

“The market had priced in optimism around the roadmap and potential Strait of Hormuz reopening, but traders are now taking a more measured approach as they await concrete evidence that the deal will hold and traffic will normalise,” Waterer added.

Two crude tankers with just under two million barrels of oil sailed through the Strait of Hormuz on Monday, ship-tracking data showed, in a sign that traffic was picking up following weaker flows on Sunday due to concerns over passage through the waterway.

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Separately, US crude stocks in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest since June 1983, Department of Energy data showed on Monday, as supplies tightened in the wake of the US-Iran conflict. REUTERS