A picture of an oil ship just for illustration. (Photo: IC photo/Imaginechina via AFP).
The price of Brent crude traded below $75 a barrel on Wednesday afternoon for the first time since the outbreak of the war between the US and Iran.
The international benchmark by which the price of crude oil is measured fell 3.1% to $74.73. The reopening of the Strait of Hormuz increased shipping traffic and oil prices began to fall even further.
The fall in the oil price began after the US and Iran reached an agreement last week to end the conflict that began on February 28. Earlier it was also reported that the US suspended sanctions against Iranian oil on Monday after Vice President JD Vance said Iran would allow UN nuclear inspectors to return to the country.
However, investors remain hesitant because it is still uncertain what the transport charge that the Iranian government may charge in the Strait of Hormuz will be. Demand for oil will also remain high as countries begin to replenish strategic reserves.
“The carnage of oil prices will continue, but there will also be relief for consumers around the world if the oil industry can fill the gap caused by the disruption of the past months,” Chris Beauchamp, chief market analyst of IG Trading, told AFP.
The markets in the US, Europe and Asia also responded positively throughout the day. Tokyo did close lower than expected.
Iran closed the waterway early in the war, sending economic shockwaves around the world.
According to the IRNA news agency, Mohammad-Bagher Ghalibaf, Iran’s chief negotiator, said upon his return after talks: “The Strait of Hormuz will never return to pre-war conditions and will be administered by the Islamic Republic of Iran, in accordance with international law.”