Oil prices fell on Thursday to levels last seen before the start of the Iran war as expectations of rising supply from the Middle East outweighed demand concerns.
Prompt-month Brent crude futures for August delivery were down $1.08, or 1.46%, to $72.66 a barrel by 0952 GMT, while US West Texas Intermediate lost 84 cents, or 1.19%, to $69.50 a barrel.
Both contracts hit their lowest since February 27.
US Energy Secretary Chris Wright told a forum that flows through the Strait of Hormuz were close to those before the start of the Iran war, with at least 20 million barrels having exited the strait in the last 24 hours.
A return to complete normalcy would take a few weeks, however, because the strait needs to be demined, he added.
"Most of the increase in flows from the Gulf is outbound — ships exiting the Strait," UBS analyst Giovanni Staunovo said.
However, a significant increase in inbound flows requires shipping confidence to return, including safety assurances and mine clearance to allow insurance premiums to normalise, Staunovo said.
Rising Middle Eastern supply, together with Iran set to boost sales after a temporary reprieve from US sanctions, drove down prices of physical crude oil cargoes around the world.
Goldman Sachs said it does not expect a large pick‑up in Iranian production, even if sanctions relief extends beyond the August 21 expiry.
On the demand side, China is likely to remain the main buyer of Iranian crude, as EU and UK sanctions on Iranian oil and vessels remain in place, the bank added.
Also Read: MidEast agreement pushes crude oil prices below $75 for first time
An accord agreed last week to end the US-Israeli war, which began on February 28, has allowed the resumption of traffic through the strait.
It set up a 60-day period of negotiations to tackle tougher issues, such as Iran's nuclear programme. Wright said oil would continue to flow through the strait even if the deal did not hold, and that Iran would not be able to close it again.
UBS lowered its Brent price forecasts to $85 per barrel for end-September and end-December, and $80 per barrel for end-March and end-June 2027.
Meanwhile, Iraq will consider all available options if its OPEC quota is not significantly increased and has weighed leaving the producer group, sources with knowledge of Iraqi oil policy told Reuters.
The prospect of Iraq considering an exit from OPEC follows the surprise exit of the United Arab Emirates this year. Iraq is one of five founding members and the group was formed in the Iraqi capital.
On the geopolitical front, Ukraine's military hit an oil depot in Russia's Krasnodar region and two oil refineries in the Ufa region, 1,500 km (932 miles) from the Ukrainian border, President Volodymyr Zelenskiy said on Thursday.
