Oil prices fall below pre-Iran war levels as Hormuz traffic normalizes
Brent crude drops beneath its late-February close of $72.48 a barrel as tanker passages through the Strait of Hormuz rebound, easing supply fears after the Iran conflict.
Oil prices slide back to pre-war territory
Brent crude, the global benchmark, dropped to around $72.50 a barrel on Thursday, beneath its close of $72.48 on February 27, the eve of US and Israeli strikes on Iran. The decline erases the sharp gains seen after the conflict erupted, when prices spiked 7.26% on the first full trading day and peaked near $120 in April.
The development had helped drive prices lower as traders became more confident about the security of energy shipments.
Traffic through the Strait of Hormuz picks up
Shipments via the critically narrow waterway are approaching pre-war levels, according to multiple data providers. Kpler recorded 70 passages on Wednesday, compared with more than 100 daily before the war. Windward described activity as nearing “functional normality,” and AXSMarine noted that bulk carriers have already returned to pre-war volumes. MarineTraffic data showed vessel movements doubling over the past 24 hours to the highest count since late February.
- Brent closes at $72.48/barrel, the session before US-Israeli strikes on Iran
- Oil spikes 7.26% to $77.74 on the first full trading day after the war begins
- Brent slides back to around $72.50 as Hormuz traffic recovers
Relief at the pump and for heating bills
In Germany, diesel prices briefly dipped below pre-war levels last weekend, touching €1.73 per liter, according to ADAC. Heating oil fell to €110.90 per 100 liters on Thursday, down sharply from over €150 in April. The drops are expected to feed through to consumers with a lag of about ten days. A separate tax break is expiring at month’s end, but the oil market slide should soften the blow.
Inflation outlook brightens
The retreat in energy costs is already cooling headline inflation. German consumer prices rose 2.6% in May, down from 2.9% in April, which had been boosted by war-driven fuel spikes. A Schufa survey early in the conflict found three-quarters of respondents feared rising living costs. With oil back at pre-war levels, analysts see further disinflation ahead.
Lingering uncertainties
Not all risks have vanished. Disagreements over a potential transit toll for the Strait of Hormuz remain a sticking point in US-Iran talks, France 24 reported.
Market structure in futures also shows short-term supply easing, but the backdrop of strategic releases and weaker Chinese demand adds to the sense of temporary balance.Traders are pricing in a return to normality. They are not taking into account the risks further down the road, which still remain very real.
