WASHINGTON (dpa-AFX) - Extending yesterday's sharp losses, crude oil prices have plummeted on Wednesday amid gradual recovery in tanker traffic across the Strait of Hormuz while indirect negotiations between the U.S. and Iran in an effort to reduce Middle East tensions gain pace.
WTI Crude Oil for August month delivery was last seen trading down by $1.12 (or 1.61%) at $68.38 per barrel.
Nearly after 124 days since the conflict in the Middle East between the U.S.-Israel versus Iranian forces erupted, on June 17, the U.S. and Iran signed a Memorandum of Understanding to halt the attacks immediately for a 60-day period.
Both nations agreed to discuss during this interval all contentious issues which caused the war and arrive at a resolution.
The indirect talks between the U.S. and Iran went on today in Doha, Qatar.
U.S. President Donald Trump described the negotiations as 'very good' and added that the denuclearization of Iran is moving along very well.
Further, the Wall Street Journal reported that Trump held multiple conversations with Defense Secretary Pete Hegseth and the Chairman of the Joint Chiefs of Staff General Dan Caine about resuming the war with Iran but reportedly Trump has opted to give diplomacy a full chance.
Trump is willing to extend the 60-day truce, if needed, for discussing Iran's nuclear ambitions.
With signs of near-term conflict vanishing, supply concerns diminished, weighing on crude oil prices today.
U.S. representatives in Doha, Qatar discussed with Qatari mediators on implementing the interim MoU.
Qatar's Emir Sheikh Tamim bin Hamad Al Thani met U.S. envoy for Middle East Steve Witkoff and Trump's son-in-law Jared Kushner to take forward the peace talks with Iran and work for Israel-Lebanon ceasefire.
Iran's Deputy Foreign Minister Kazem Gharibabadi met Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani and later met a Pakistani representative in a trilateral meeting.
The Strait of Hormuz which was closed by Iran after the beginning of the war was reopened by the Iranian administration following the signing of MoU.
On its part, the U.S. lifted its naval blockade on Iranian ports and permitted Iran to export its crude oil, petrol, and petroleum products.
Shipping traffic has now regained pace, and one after another, the stranded ships are heading to their respective destinations.
However, vessel movements slowed down last week after the U.S. and Iran traded attacks following two separate incidents of projectile hits on two ships transiting the strait but after U.S. and Iran reconciled to halt the strikes, traffic resumed.
Al Jazeera reported after reviewing maritime data that 21 ships including oil tankers have used the Omanian territorial waters.
On the inventory front, data from the American Petroleum Institute revealed that U.S. crude oil inventories fell by 6,072,000 barrels for the week ending June 26 following a draw of 765,000 barrels in the previous week.
According to the U.S. Energy Information Administration, for the week ending June 26, crude oil inventories in the U.S. fell by 3,775,000 barrels. At the Cushing, Oklahoma delivery hub, inventories rose by 709,000 barrels. This is the first increase after nine consecutive weeks of decline.
For the same period, gasoline inventories decreased by 2,333,000 barrels, distillate inventories (which include diesel and heating oil) increased by 2,500,000 barrels in the week to 108,600 barrels, and heating oil inventories decreased by 310,000 barrels.
Citing sources, Reuters reported that the Organization of Petroleum Exporting Countries are planning to increase their output targets by about 188,000 barrels per day from August. The cartel which is set to meet on Sunday did not officially confirm or deny the report.
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