Crude Oil Prices Drop Amid Iranian Oil Sanctions Waiver

U.S. crude oil prices slipped by 2.7% on Monday, reaching approximately $74 per barrel. This decline followed Treasury Secretary Scott Bessent’s announcement of a 60-day waiver on sanctions for purchasing Iranian oil. This marks the first instance of crude prices falling below $75 since early March.

International Brent crude also experienced a decrease of 4%, settling at around $77 per barrel. Both of these figures are higher than their prices just before the conflict, which were $62 and $68 per barrel, respectively.

Kpler’s data from the Strait of Hormuz indicated a total of 17 crossings on Sunday, a drop from 35 on Saturday and 19 on Friday. In a statement shared on social media, Bessent highlighted Iran’s commitment to ensuring free and open transit in the Strait of Hormuz.

Despite Monday’s market optimism, the situation remains tentative. Ongoing negotiations regarding the strait and regional military activities are still in flux. On Saturday, Iran issued a threat to close the strait due to Israeli military actions in Lebanon.

Ship traffic through the Strait of Hormuz started to show signs of recovery over the weekend, but volumes remain much lower than prewar levels according to international data sources. Kpler, managing the MarineTraffic website, reported a daily average of 23 transits from Friday to Sunday. This shows significant improvement from April’s war peak, though it remains below the prewar average of 130 vessels daily.

The key point is not that traffic stopped, but that traffic continued while using less standard/less transparent routing, Kpler explained in a statement.

Additionally, the prices of other essential commodities are approaching prewar levels. According to Argus, a commodities group, the price of urea, an important fertilizer component, has decreased by 50% from its April peak prices.