Oil Prices Recover as Traders Watch Strait of Hormuz and U.S.-Iran Progress
Market Reactions and Geopolitical Developments
Oil Price Movements and Investor Sentiment
June 23 (Reuters) - Oil prices rebounded on Tuesday after a sharp fall the previous session supported by tempered optimism over U.S.-Iran peace talks, while investors awaited clearer signs of progress in restoring crude flows through the Strait of Hormuz.
Brent crude futures gained 24 cents, or 0.38%, to $78.15 a barrel and U.S. West Texas Intermediate rose to $74.19 a barrel, up 33 cents, or 0.46%, as of 0026 GMT.
Impact of U.S.-Iran Sanctions and Peace Talks
Prices fell more than 3% on Monday after the United States granted Iran a 60-day sanctions waiver following initial peace talks, and as officials reported a lull in hostilities in Lebanon under the broader agreement.
Strait of Hormuz Tensions and Market Skepticism
The developments followed a weekend that had appeared to put the week-old accord in jeopardy, including threats from U.S. President Donald Trump to restart the war if Iran disrupted shipping through the Strait of Hormuz after Tehran declared the strategic waterway closed.
"There remains a prevailing dose of market scepticism, rooted in deep-seated mistrust between Washington and Tehran, suggesting that any return to pre-war oil prices is likely to be delayed rather than immediate," said Tim Waterer, chief market analyst at KCM Trade.
Statements from U.S. Leadership
Trump said in a post on Truth Social on Monday that Iran will agree to have weapons inspections to ensure "nuclear honesty."
"If Iran doesn't live up to their agreement, or if they're not behaving, I will do what I have to do," Trump later told reporters.
"The market had priced in optimism around the roadmap and potential Strait of Hormuz reopening, but traders are now taking a more measured approach as they await concrete evidence that the deal will hold and traffic will normalise," Waterer added.
Crude Flows and U.S. Strategic Petroleum Reserve
Strait of Hormuz Shipping Activity
Two crude tankers with just under 2 million barrels of oil sailed through the Strait of Hormuz on Monday, ship-tracking data showed, in a sign that traffic was picking up following weaker flows on Sunday due to concerns over passage through the waterway.
U.S. Strategic Petroleum Reserve Levels
Separately, U.S. crude stocks in the Strategic Petroleum Reserve fell to 331.2 million barrels last week, the lowest since June 1983, Department of Energy data showed on Monday, as supplies tightened in the wake of the U.S.-Iran conflict.
(Reporting by Pranav Mathur in Bengaluru; Editing by Jacqueline Wong)
