Oil prices fell Wednesday as reports of increased crude flows through the Strait of Hormuz combined with US plans to release additional barrels from its Strategic Petroleum Reserve to weigh on the market. International benchmark Brent crude futures for December delivery decreased 0.3% to $95.88 per barrel at 10:15 a.m. local time (0715 GMT), down from $96.16 at the previous close. US benchmark West Texas Intermediate (WTI) crude futures for November delivery fell 0.1% to $89.26 per barrel from $89.38.
The decline in oil prices was driven by remarks from US President Donald Trump indicating that oil flows through the Strait of Hormuz have recently increased, easing supply concerns in the market. Speaking to reporters in the White House garden Tuesday, Trump said that the US has taken more oil out of the strait in the last few days than has ever been taken out at any time in history. Although oil flows through the strait have recovered from levels seen at the start of the war, the latest 60-day data show that flows have averaged around 7.85 million barrels per day, well below the pre-war level of about 20 million barrels per day.
Prices also fell due to smoother energy flows from the Middle East, bolstered by Saudi Arabia's restoration of half its export capacity through the East-West pipeline. Adding to the downward pressure, the US offered energy companies up to 40 million barrels from its Strategic Petroleum Reserve on Tuesday. This builds on a prior agreement to loan 172 million barrels as part of a wider international effort to release emergency reserves.
Expectations that the US Federal Reserve could raise interest rates further also weighed on oil prices. Fed Governor Lisa Cook said future rate adjustments would depend on the economy's response to monetary policy and upcoming inflation and employment data. Markets are pricing in roughly a 50% probability of a 25-basis-point rate hike at the Fed's October meeting.
Expectations for further rate hikes could weigh on economic activity and oil demand, while a stronger dollar makes oil more expensive for buyers using other currencies. However, remarks by Mohsen Rezaei, secretary of Iran's Supreme National Security Council, indicated that tensions between Washington and Tehran remain elevated, limiting the downward movement in prices. Rezaei criticized US attacks on Iran and said Tehran had presented conditions to Washington, while accusing the US of resorting to an air blockade.
The exchange of harsh statements has weakened expectations of a short-term easing in tensions and kept uncertainty over oil shipments through the Strait of Hormuz elevated. Trump also denied an Axios report that he was willing to ease sanctions on Iran and release frozen Iranian funds in exchange for concrete steps on Tehran's nuclear program, stating in a social media post that he offered Iran nothing.
Source: aa.com.tr