Oil prices fell Wednesday, with the US crude benchmark dropping below $70 a barrel, as tankers continued to move through the Strait of Hormuz after being trapped in the Persian Gulf due to the U.S-Iran war.
West Texas Intermediate crude oil was down 4% at $70.24 a barrel during late-morning trade, after hitting a session low of $69.63, its lowest level since March 2.
Brent crude oil, the world's benchmark, dropped 4.2% to $73.83 a barrel, after touching a session low of $73.22, its lowest since before the war began.
The US and Israel launched attacks on Iran at the end of February, with the hostilities spreading to other parts of the Middle East and resulting in the effective closure of the Strait of Hormuz, a crucial chokepoint for crude flows that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
Last week, the US and Iran signed a memorandum of understanding to end their war and reopen the strait.
"With shipping traffic steadily improving through the Strait of Hormuz, traders are increasingly focused on a growing queue of cargoes waiting to move," Saxo Bank Head of Commodity Strategy Ole Hansen said in a report Wednesday.
US President Donald Trump, in a social media post Wednesday, criticized oil companies for "not dropping their prices at the pump commensurate with the sharply lower prices they are paying for oil."
Trump said he had instructed the Department of Justice "to immediately start looking into this."
However, Saxo's Hansen said the return of supply is likely to be slow.
"While oil may now flow more freely through Hormuz, the process of normalizing trade flows, clearing vessel queues, rebuilding production and restoring customer relationships will take time," he said. "The same applies to inventory rebuilding."
