International Oil Prices Slightly Lower... Supply Overruns Fears Grow as Geopolitical Tensions Ease

International oil prices are fluctuating slightly amid concerns that production could outstrip demand as tensions in the Middle East and other oil-producing nations ease. The decline reflects the reduction of recent war-driven political instabilities and the assurance that oil supplies are proceeding without disruption. On the 6th (local time), West Texas Intermediate (WTI) for August delivery on the New York Mercantile Exchange closed at $68.55 per barrel, down $0.14 (0.20%) from the previous day. On the same day, Brent crude for September delivery on the London ICE Futures Exchange closed at $71.99 per barrel, down $0.13 (0.18%).

Shipping through the Strait of Hormuz, a major global crude oil transport route, continues. While there has been no significant progress in ceasefire talks between the U.S. and Iran, vessel transit through the Strait of Hormuz remains ongoing. From June 29 to July 4, 160 vessels were tallied passing through the strait.

Saudi Arabia has significantly lowered its official selling price (OSP) for crude oil for August. Saudi state-owned oil company Aramco cut the August OSP for India by $11 per barrel, setting it $1.50 lower than the average price of Oman and Dubai crude. This OSP reduction by Aramco marks the first such measure in six years since the production increase competition with Russia during the spread of COVID-19 in 2020.

However, the decline in oil prices that day was limited. This is because substantial market concerns had already been priced in during recent trading sessions, where prices had fallen sharply on news related to oversupply. Despite Aramco’s price cut, oil prices finished with a mild correctional trend without a significant additional drop.