Oil prices fell on Tuesday after U.S. Energy Secretary Chris Wright said there was a “very meaningful increase” in shipping traffic through the Strait of Hormuz.
usa crude oil Futures fell 3.4% to close at $88.20 per barrel. brent Futures, an international benchmark, fell 2.97% to settle at $91.45.
Wright did not provide specific data on how much oil spills passing through Hormuz had increased. He made the remarks during an interview with CNBC’s Brian Sullivan at the Atlantic Council Global Energy Forum.
Wright said oil exports through Hormuz were increasing and “will continue to increase.”
Oil prices also fell after President Donald Trump accused Iran of shooting down a US Apache helicopter patrolling Hormuz. President Trump said in a social media post that the two pilots were safe and uninjured, but that the United States must respond to the attack.
hormuz oil flow
JPMorgan analysts wrote in a June 4 note that more oil may be passing through Hormuz than is publicly visible. The US Navy is secretly coordinating with several ships attempting to leave the Persian Gulf.
The bank estimates that around 2 million barrels a day could be leaking from tankers with their transponders switched off.
“Despite the continued naval blockade and the sharp reduction in commercial traffic, an alarming amount of crude oil and petroleum products appears to still be passing through the Straits,” JPMorgan analysts said.
Meanwhile, despite violence erupting between Israel and Iran this week, President Trump on Monday tried to convince markets that a deal with Tehran to reopen Hormuz island was “within a few days.”
President Trump has repeatedly said he is close to a deal with Tehran to reopen Hormuz Island, but no such deal has yet materialized. A fragile ceasefire put in place in April nearly collapsed this week after Iran fired missiles at Israel in retaliation for the attack on Lebanon.
Israel responded with an attack on the Islamic Republic. President Trump pressured Israeli Prime Minister Benjamin Netanyahu to refrain from further attacks.
The violence briefly spiked oil prices on Monday, but so far the strike outbreak appears to have ended without further escalation. Iran and Israel announced a ceasefire.
Oil prices have increased by about 30% since the US and Israel attacked Iran on February 28th. The Iranian government retaliated by attacking tankers in the Strait of Hormuz and digging mines in sea lanes. As a result, traffic through Hormuz plummeted, causing the largest oil supply disruption in history.
President Trump has put pressure on Iran to reach a deal by blockading Iranian ports and ships.
Oil industry executives and analysts say oil prices have remained modest relative to the scale of the disruption, as global stockpiles provide a cushion. But prices are likely to rise later this year, they say, as inventories dwindle rapidly just as summer demand peaks.
