Oil Prices Continue to Fall: The Main Reasons
17 June 09:35
Oil prices are falling on the morning of Wednesday, June 17; traders are assessing the details of the memorandum between the U.S. and Iran, as well as reports of a decline in U.S. fuel inventories. This is reported by "Komersant Ukrainian", citing Interfax-Ukraine.
As of 8:10 a.m., the price of August Brent futures on the London-based ICE Futures exchange was down $0.57 (0.72%) to $78.39 per barrel. On Tuesday, the contract fell by $4.21 (5.1%) to $78.96 per barrel.
WTI crude oil futures for July delivery on the New York Mercantile Exchange (NYMEX) electronic trading platform have so far fallen by $0.58 (0.76%), to $75.47 per barrel. At the close of the previous session, the price of these contracts fell by $4.7 (5.8%) to $76.05 per barrel.
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The memorandum of understanding between the U.S. and Iran, which is scheduled to be signed on Friday in Switzerland, provides for the easing of U.S. sanctions on Iranian oil and petrochemical exports, as well as the unfreezing of Iranian assets.
In addition, the U.S. and its regional partners commit to developing a plan for Iran’s recovery and development, providing at least $300 billion in funding, according to a text released Tuesday by the pan-Arab television channel Al Arabiya.
U.S. President Donald Trump had previously stated that the Strait of Hormuz was reopened in accordance with the terms of the agreed-upon memorandum, but later revised the timeline, saying that the strait would be reopened following the official signing ceremony on Friday.
“Oil prices are falling rapidly amid speculation that the Strait of Hormuz will soon be reopened,” noted Bob Yager of Mizuho.
Meanwhile, Iranian tankers have begun exporting oil for the first time in the past two months, according to CNN. According to TankerTrackers, an analytics firm that tracks maritime shipments, Iranian tankers have already successfully shipped two batches of oil. According to its data, which is corroborated by satellite imagery, at least two supertankers belonging to the National Iranian Tanker Company, carrying 3.8 million barrels of oil, have passed through the U.S. naval blockade.
Meanwhile, the American Petroleum Institute (API) reported yesterday that the country’s oil inventories fell by 8.33 million barrels last week. Analysts surveyed by Trading Economics had expected a decline of 4.5 million barrels.
The API receives data from refinery operators, oil storage facilities, and pipeline operators on a voluntary basis. Data from the U.S. Department of Energy on oil inventories, which is more significant for the market, will be released on Wednesday at 5:30 p.m. local time.
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