Oil prices drop over $1 as Strait of Hormuz flows improve despite US-Iran conflict

Oil prices have decreased by over $1 per barrel as market flows through the Strait of Hormuz have improved, despite the ongoing conflict between the United States and Iran. Brent crude settled at $89.03 a barrel, while West Texas Intermediate (WTI) closed at $83.59, highlighting a drop in prices. This decline comes after initial fears of supply disruptions due to the US-Iran hostilities had driven prices sharply higher. The easing of tensions and subsequent recovery in shipping flows, although still below pre-war levels, appears to have alleviated some supply concerns. Key Takeaways Activity suggests a decrease in the likelihood of crude oil reaching a new all-time high by September 30, with implied probabilities dropping to 5.6% for that period. Improved flows through the Strait of Hormuz appear consistent with scenarios where oil prices remain subdued, despite geopolitical tensions. The pricing suggests that participants are factoring in the current easing of supply fears as a response to increased oil flows. What to Watch Observers will be monitoring developments in the US-Iran conflict closely, as any escalation could impact oil supply routes and pricing. Key actors such as OPE...