By Ronnie Harui and Giulia Petroni
Oil prices fell to their lowest since the start of the Iran war after President Trump signed a deal that reopens the Strait of Hormuz, a critical shipping lane that used to carry about one-fifth of global oil supplies.
In afternoon European trading, front-month Brent crude was down 1.2% to $78.62 a barrel, while West Texas Intermediate futures fell 1.8% to $74.64 a barrel. Both benchmarks were on track for weekly losses of more than 13%.
The memorandum of understanding allows the reopening of the Strait of Hormuz and lifting of a U.S. naval blockade on Iranian ports, fueling expectations that a wave of supply will soon reach global markets. A full return to normal shipping operations is likely to take months, however, as vessel operators contend with logistical and security hurdles--including repositioning tankers, rescheduling port calls and securing insurance coverage.
"Attention has now shifted to the pace at which traffic through the Strait of Hormuz can recover," analysts at Saxo Bank said. "An estimated 100 million barrels of crude and refined products are already loaded on tankers and waiting to leave the Gulf, while regional producers are taking steps to restart shut-in production."
