May WTI crude oil prices fell by 11.45%, closing at a five-week low of $83.79 per barrel, while May RBOB gasoline dropped 5.02% to $2.99 per gallon on Friday. The decline in energy prices followed Iran’s declaration that the Strait of Hormuz is fully open to commercial shipping, potentially leading to a peace deal that could release millions of barrels of oil and fuel stranded in the Persian Gulf. An agreement would follow a recently established 10-day ceasefire between Israel and Lebanon.
Further impacting crude prices, US-Iran negotiations are reportedly considering the release of $20 billion in frozen Iranian assets in exchange for Iran forfeiting its enriched uranium stockpile. This comes amidst ongoing conflict that has limited approximately 13 million barrels per day of global oil supply due to disruptions and damage from war, as highlighted by the International Energy Agency (IEA).
Meanwhile, OPEC+ is struggling to restore production following a 2.2 million bpd cut made in early 2024, with current production levels at a 35-year low. Domestic factors are also significant: the number of active US oil rigs decreased by one to 410, approaching a four-and-a-half-year low, while US crude oil production remained unchanged at approximately 13.596 million bpd as of April 10.
