ISLAMABAD (Kashmir English): Global crude oil prices have witnessed a significant decline on Wednesday as the price of Brent crude reached its lowest level since February 27, the day before the US and Israel launched war on Iran.
Benchmark oil prices fell more than $3 to their lowest level, with Brent touching a low of $73.22. U.S. crude futures slipped below $70 a barrel, the lowest level since March 2, Reuters reported.
The reason for the sharp decline in oil prices in the global market is the normalization of oil tanker traffic through the Strait of Hormuz after the US-Iran deal.
Three stranded tankers carrying 5 million barrels of crude oil were exiting the Strait of Hormuz on Wednesday, with two heading to Asia, shipping data showed, as the interim deal between Iran and the U.S. unlocks more supply stuck in the Gulf.
In addition, the prices have also come under pressure after the US eased sanctions for 60 days on Iranian crude oil exports. The move is likely to increase supply in the global market.
Another major reason is the increase in oil supplies from Gulf countries and the sale of some cargoes at discounted rates.
Following all these developments, investors have started to remove the additional geopolitical risk premium included in oil prices, which has led to a further sharp decline in prices.
At the same time, gold prices also fell, while global stock markets have improved relatively.
Although oil prices are currently falling continuously in the global market, energy experts are warning that the situation in the Middle East is still uncertain.
If tensions increase or oil shipments through the Strait of Hormuz are affected, crude oil prices may accelerate again.
