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The global benchmark has now fallen for a fourth straight session, after dropping nearly 5% on Monday and around 6% over the past week, as traders continued to unwind the risk premium that had built up during the recent U.S.-Iran conflict.
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Brent crude fell below $81 per barrel on Tuesday, June 16, extending its recent decline and touching its lowest level since March 4, as easing geopolitical tensions in West Asia and expectations of higher oil supplies weighed on prices.
The global benchmark has now fallen for a fourth straight session, after dropping nearly 5% on Monday and around 6% over the past week, as traders continued to unwind the risk premium that had built up during the recent US-Iran conflict.
The latest leg of the decline comes ahead of the signing of an interim agreement between the United States and Iran in Switzerland on June 19. The deal is expected to pave the way for the reopening of the Strait of Hormuz, a critical shipping route that normally carries nearly a fifth of global oil supplies.
Investor sentiment improved further after US President Donald Trump reiterated that the strait would remain open and toll-free, easing concerns over disruptions to global crude flows.
Analysts at Kotak Securities said crude prices have been pressured by expectations of supply normalisation and fading geopolitical risks, though uncertainty remains over the implementation of the agreement and the pace at which shipping activity returns to normal.
Adding to the bearish sentiment, Abu Dhabi Oil Company (ADNOC) has significantly increased spot crude sales during the ceasefire period. Trade sources told Reuters the company has sold at least 30 million barrels of crude so far this month to refiners and trading firms across Asia, including India, China, Japan and South Korea.
Indian Oil Corporation and Bharat Petroleum Corporation have together purchased around 6 million barrels of Abu Dhabi crude this month, while major Asian refiners including Japan's Eneos, South Korea's SK Energy and China's Unipec have also secured sizeable cargoes.
The additional supply entering the market has reinforced expectations that crude availability in Asia could improve in the coming weeks, further reducing concerns about shortages.
Meanwhile, nearly 300 loaded vessels remain stranded inside the Persian Gulf, with a similar number waiting to enter the region, highlighting the potential for a sharp rebound in exports once normal shipping routes resume.
The slide in oil prices has also rippled through other commodity markets. Aluminium prices fell around 4% overnight to a two-month low as traders anticipated the release of Middle East inventories and the restoration of regional supplies.
Base metals broadly retreated from recent highs, while gold rose more than 2% and silver gained about 3% as investors shifted their attention to the US Federal Reserve's policy meeting.
Market participants are now awaiting details of the US-Iran agreement and guidance from the Federal Reserve for further direction.
While expectations of recovering supply and easing geopolitical tensions continue to pressure crude prices, analysts caution that uncertainties around shipping safety, vessel availability and the long-term operating framework for the Strait of Hormuz could keep volatility elevated.
(Edited by : Ajay Vaishnav)
