Crude oil futures retreated in midday trading on Monday after signs of progress in US-Iran negotiations, and the authorization of Iranian energy exports eased concerns about near-term supply constraints.
Front-month West Texas Intermediate crude futures dropped by 2.4% to $74.73 per barrel, while Brent futures were down 3.5% to $77.76/bbl.
EBW AnalyticsGroup strategists said WTI for July delivery fell as low as $73.58/bbl on Friday after the US and Iran signed a memorandum of understanding that raised expectations of the reopening of the Strait of Hormuz.
The analysts said that, though Iran reiterated threats to close the Strait of Hormuz over the weekend, more than 17 million barrels per day transited the strategic waterway on Saturday.
On Monday, the US authorized the sale of Iranian oil and fuel as part of an agreement to end the Middle East conflict.
The US Treasury Department issued a 60-day license that allows Iran to sell its energy products through Aug. 21 and make payments in US dollars. The waiver also allows for the importation of Iranian crude oil and other petrochemical and petroleum products into the US.
"In line with the ongoing productive talks in Switzerland, Iran has committed to free and open transit in the Strait of Hormuz and to permit International Atomic Energy Agency inspectors into their country," US Treasury Secretary Scott Bessent said in a post on X.
Meanwhile, the US and Iran made progress during peace talks aimed at reaching a final deal within 60 days, including an agreement to end hostilities in Lebanon. Vice President JD Vance said on Monday that talks between the US and Iran have made "great progress" despite "threatening" and "whining."
Earlier, Iranian Foreign Minister Abbas Araghchi described the talks as having delivered "major progress," noting that Tehran had secured waivers for oil and petrochemical exports, the lifting of the blockade on its ports, and the release of some frozen assets.
On the supply front, the latest shipping data show an uptick in oil and liquefied natural gas tanker traffic through the Strait of Hormuz over the 19-21 June period, though overall flows remain below pre-conflict levels.
MarineTraffic said a total of 71 confirmed vessel transits via the strategic waterway, with activity peaking at 35 crossings on Saturday.
However, tanker traffic via the Strait remains about 15% below pre-conflict levels, EBW said, adding that alternative supply routes and weakening Asian demand are helping loosen balances.
Saudi Arabia's East-West pipeline, lower Chinese imports, and strategic petroleum reserve releases are adding to available barrels, potentially allowing inventories to rebuild later this summer.