On Wednesday, June WTI crude oil closed down $7.19 (-7.03%) at a two-week low, while June RBOB gasoline fell $0.1613 (-4.46%), sinking to a one-week low. This drop followed reports that the U.S. may be nearing a peace agreement with Iran to resolve a nearly 10-week war, potentially leading to the reopening of the vital Strait of Hormuz, which sees about 20% of the world’s oil transiting through it. According to Goldman Sachs, crude output in the Persian Gulf has been curtailed by approximately 14.5 million barrels per day due to ongoing hostilities and associated disruptions.
President Trump indicated significant progress towards an agreement with Iran, which may result in both parties lifting restrictions on the Strait of Hormuz. The ongoing blockade has contributed to a global energy crisis, with the International Energy Agency reporting that around 13 million barrels per day of global oil supply has been affected by the conflict. The U.S. crude oil inventory report revealed a smaller-than-expected draw of 2.31 million barrels, compared to the anticipated 3.4 million barrels.
The UAE announced it will exit OPEC on May 1, allowing it to increase production without adhering to OPEC quota restrictions. OPEC’s April production reached a 35-year low of 20.55 million barrels per day, impacted by the Iran conflict and closures in the Strait of Hormuz. Simultaneously, Baker Hughes reported an increase of one active U.S. oil rig, bringing the total to 408, just above a four-and-a-half-year low.
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