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Update: WTI Oil Falls Despite Renewed Fighting Between the US and Iran

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West Texas Intermediate (WTI) crude oil closed lower on Thursday even as renewed fighting between the U.S. and Iran threatens to keep the Strait of Hormuz closed, again shutting in tankers bringing Persian Gulf supply to the market.

WTI crude oil for August delivery closed down $1.44, or 2%, to settle at $72.08 per barrel, while September Brent oil was last seen down $1.72, or 2.2%, to $76.30.

The drop comes as the U.S. war on Iran again heated up, with the US President Trump on Wednesday declaring a ceasefire agreement reached last month was over. The U.S. hit 90 targets in Iran, according to the Wall Street Journal, while Iran retaliating by striking at US military bases in Kuwait and elsewhere. The US also reapplied sanctions on Iranian oil exports lifted last month.

The revived hostilities are threatening to again close the Strait of Hormuz, the choke point for 20% of daily oil demand supplied by Persian Gulf nations prior to the Feb. 28 start to the war. Still, ships are continuing to move through the Strait, with hormuzstraitmonitor.com reporting 34 ships moved through the waterway over the past day.

"Traffic through the Strait of Hormuz slowed to a crawl, with most movements occurring along an Iran-approved route closer to the waterway's northern side, while the US-backed Omani corridor where recent Iranian attacks occurred remained quiet," Saxo Bank wrote.

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