Crude oil prices tumble as Strait of Hormuz supply concerns ease

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Global crude oil prices fell sharply on Friday and were on track to post steep weekly losses as easing supply concerns in the Strait of Hormuz outweighed fresh geopolitical tensions following an attack on a cargo vessel near Oman.

According to IANS, international oil benchmark Brent crude futures fell USD 1.51 or 2 per cent, to USD 73.75 a barrel in early trade.

Similarly, US West Texas Intermediate (WTI) crude declined USD 1.50 or about 2 per cent to USD 70.42 a barrel.

Both benchmark contracts had gained more than 2 per cent in the previous session after a cargo vessel was struck by an unidentified projectile near Oman, prompting the United Nations' shipping agency to suspend its voluntary evacuation programme.

According to the reports, two US officials said Iran had fired on the cargo vessel as it attempted to transit the Strait of Hormuz. Iranian authorities, however, said the security of ships sailing outside designated Hormuz routes could not be guaranteed, as per IANS.

Brent and WTI experience losses in the weekly trade

Despite the latest security concerns, Brent and WTI were both headed for weekly losses of nearly 7 per cent as fears of supply disruptions eased following an improvement in tanker traffic through the Strait of Hormuz.

Crude shipments through the strategic waterway rose this week to their highest level since the US-Israel conflict with Iran began in February, after a ceasefire helped reopen the route. However, overall vessel traffic remained well below the pre-conflict average of around 125 ships per day, according to IANS.

The Indian basket of crude oil, a weighted average of Brent Dated, Oman and Dubai crude grades imported by domestic refiners, averaged at USD 86.31 per barrel in June so far, after surging during the West Asia conflict. The basket had averaged USD 106.23 per barrel in May and USD 114.48 per barrel in April.

Global benchmark Brent crude, which had touched around USD 120 per barrel at the peak of the West Asia conflict when the US and Israel launched an attack on Iran, is now hovering near USD 74 per barrel.

(With inputs from IANS)