International crude oil prices have seen a sharp decline in the month of June, with prices falling by up to 25 percent. A notable highlight is that American crude oil, known as West Texas Intermediate (WTI), is now trading below the 70 dollar per barrel mark. On the other hand, crude oil from Gulf countries has returned to pre-war levels. This trend comes despite the fact that US reserves have reached their lowest point in 12 years. Specifically, in the 19 trading days of June, American crude prices have decreased on 13 of those days, marking a significant period of volatility and downward pressure on energy markets.
Factors Driving the Price Drop
According to a report by Reuters, the decline in crude oil prices is attributed to peace talks between the United States and Iran, along with the resumption of ship movements through the Strait of Hormuz. Meanwhile, Gulf crude oil is trading at pre-war levels, specifically below 73 dollars per barrel, which is a level not seen since before February 27. This downward trend suggests that common people might see relief in petrol and diesel prices in the coming days, while experts believe that the opening of the Strait of Hormuz and the US granting a two-month license for Iranian oil supply are the primary reasons for this shift. Also, other Middle Eastern players have announced production and supply increases, further pushing prices down.
WTI and Cushing Storage Hub Details
41 percent decrease. This is the lowest level for American crude since March 2. Since June 1, WTI prices have plunged by 25 percent. The Reuters report mentions that the reopening of the Strait of Hormuz for tankers on Wednesday pushed prices below 70 dollars, even as stocks at the Cushing storage hub in Oklahoma fell to their lowest since 2014, at approximately 19 million barrels. The US Energy Information Administration (EIA) reported that Cushing stocks dropped below the 20 million barrel level, which is considered the minimum for normal operations. When oil levels in these tanks fall below 10 to 20 percent of capacity, extraction becomes difficult, and concerns regarding quality arise due to water and sediment accumulation at the bottom.
Strategic Petroleum Reserve and Market Sentiment
The US government has been releasing oil from its Strategic Petroleum Reserve (SPR) to support domestic supply. This is part of an agreement to release 172 million barrels to counter global supply shortages and control prices during the Iran conflict. Karl Larry, a sales manager at Enverus, noted that prices are falling due to seller sentiment rather than just supply factors. Traders are pushing futures prices lower to find a support level for a later rebound. 7 million bpd. Analysts from Energy Aspects noted that the supply situation on the US Gulf Coast remains stable due to SPR releases and reduced export demand.
Brent Crude and Indian Fuel Prices
75 percent drop. This is the first time since February 26 that such levels have been reached. Since the start of June, Gulf crude prices have fallen by more than 23 percent. In India, petrol and diesel prices have remained unchanged since May 25.20 rupees per liter. 82.83 for diesel. 55. This follows a 7 to 8 percent hike in fuel prices during May.