Oil’s 3-Day Slide: Hormuz Shipping Resumes, But the Supply Recovery Is Far From Solid

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(SeaPRwire) –   By: Christian Pierce

Traders are cheering oil’s three-day drop, but the relief is built on shaky ground. The Strait of Hormuz is reopening, but flows are a fraction of normal levels. A temporary U.S. sanctions waiver for Iran adds short-term supply, but it expires in August. No one knows if the 60-day diplomatic roadmap will lead to a lasting deal. This uncertainty leaves the market teetering between oversupply fears and sudden shortages.

Let’s lay out the hard, unvarnished facts. The Strait of Hormuz, a chokepoint that normally carries 20 million barrels per day, was blocked by a months-long regional conflict. As of June 23, roughly 6 to 7 million barrels per day are moving through the waterway. Stranded supertankers have exited the Gulf, and Qatar-linked liquefied natural gas vessels have resumed voyages. ING analysts say pre-war supply levels could return if flows hit 14 million barrels per day, thanks to pipeline alternatives in Saudi Arabia and the UAE. On June 24, Brent crude dropped 1.1% to $75.93, and West Texas Intermediate fell 1.3% to $72.31—both near four-month lows. The U.S. granted a temporary sanctions waiver allowing certain Iranian oil exports through August, and negotiators agreed to a 60-day roadmap for a broader settlement. MUFG analysts note the market is pricing in gradual normalization of Middle East energy flows. U.S. crude inventories fell 765,000 barrels last week, less than analysts expected. Stocks at the Cushing, Oklahoma delivery hub dropped 1 million barrels, but gasoline and distillate fuel oil stocks rose. Traders are waiting on official weekly inventory figures from the U.S. Energy Information Administration, due later on June 24, for further confirmation.

Here’s what this means for the industry’s commercial loop. The price drop reflects trader optimism about short-term supply, but ING argues the selloff is overdone. The market is still tightening, and the recovery timeline remains uncertain. For oil producers, the temporary waiver makes long-term output expansion risky. If the 60-day roadmap collapses, sanctions could snap back, cutting Iranian supply and sending prices soaring. Refiners face mixed signals: lower crude prices reduce input costs, but rising gasoline and distillate stocks could squeeze profit margins. The end-game is a market stuck in limbo until mid-August. Any delay or breakdown in talks will erase the current price declines, while a lasting deal could keep prices suppressed for months. Traders should avoid overcommitting to either bullish or bearish positions; volatility is far from over.

Author bio: Christian Pierce, a chief financial columnist and markets commentator with 15 years of analyzing commodity trends and global supply chains.