Oil has erased almost the entire "damage" from the war with Iran, as concerns about potential disruptions to global supply are easing, while investors are closely watching developments in the strategically important Strait of Hormuz. Futures contracts for the international benchmark Brent crude for August fell by 1.7% to $75.81 per barrel, marking their lowest level since February 27, the day before the start of the war against Iran led by the US and Israel. At the same time, US West Texas Intermediate (WTI) crude contracts for August settled at $72.02 per barrel, recording losses of 1.6%.
Trump intervention on fuel prices
The President of the United States, Donald Trump, criticized oil companies because, as he argued, they are not lowering fuel prices in proportion to the significant decline in crude oil prices. In a post on the platform Truth Social, Trump stated that big oil companies are not adjusting prices at gas stations in line with the lower cost of procuring oil, despite the fact that crude prices are "dropping like a stone." He accused the companies of unfairly burdening consumers and announced that he has ordered the US Department of Justice (DOJ) to investigate the matter immediately. Meanwhile, he demanded that gasoline prices begin to decrease much faster.
Karen Young labels statements as "political theater"
Karen Young, a senior research scholar at the Center on Global Energy Policy at Columbia University, characterized Trump's statements as "political theater," pointing out that the formation of gasoline prices in the United States is a much more complex process. As she stated on CNBC's "Access Middle East," fuel prices in the US incorporate state and local taxes, which significantly affect the final cost for consumers. She explained that it usually takes several weeks for a drop in crude prices to reach refineries and subsequently be transferred to the prices that consumers pay at gas stations.
Encouraging signs for navigation in the Strait of Hormuz
Positive signals for the markets were also shown by indications that shipping traffic in the Strait of Hormuz may gradually return to normal levels. According to the International Maritime Organization (IMO), more than 11,000 seafarers who remained trapped in the Persian Gulf will begin to pass through the Strait of Hormuz, as the necessary safety guarantees have been secured. IMO Secretary-General Arsenio Dominguez stated that all necessary conditions for safe navigation have been ensured, following a thorough assessment of conditions in the region. As he reported, the operation will be carried out in close cooperation with Iran, Oman, other coastal states in the region, the United States, and the international shipping industry.
Gradual de-escalation of supply chain pressures
Tensions in the supply chain had increased in the previous period due to longer transit times for ships that remained trapped in the Strait of Hormuz, but also due to problems with the availability of air freight. Aditi Rasquinha, head of DHL Global Forwarding Greater China, told CNBC's "Squawk Box Asia" that the reopening of the passage is expected to contribute significantly to the de-escalation of these pressures. However, she underscored that it will take time for supply chains to fully normalize and for transportation to return to its usual rhythms.
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