Oil prices have fallen sharply on international markets, bringing Brent and WTI back to levels close to those seen before the latest flare-up of tensions in the Middle East. After having priced in a strong risk premium related to disruptions in the Gulf, traders are now readjusting their positions, helped by the gradual recovery of tanker traffic through the Strait of Hormuz and by signals of weaker global demand.
Brent, the international benchmark, was trading at around $72 to $73 a barrel at the end of last week, while the American West Texas Intermediate was around $69. This drop marks a change in tone in a market that in recent weeks had been mainly guided by fears of a major supply shock. The risk has not disappeared, but it is priced less aggressively into prices.
The main driver of this détente remains the situation in the Strait of Hormuz, a strategic choke point for global crude flows. The resumption of maritime traffic and the departure of new tankers from the area have reassured markets. Freight volumes are approaching more typical levels, although full normalization of oil routes will take time.
Operators remain vigilant about security conditions, marine insurance, and the technical operations required to secure navigation corridors. In plain terms, the market has moved out of panic, but not out of uncertainty.
Any minor incident in the region could quickly reintroduce a geopolitical premium into prices. This lull, however, alters the market’s immediate balance. When tensions were at their peak, prices embedded the scenario of a prolonged blockade of Gulf exports.
Price declines are not explained by supply alone. Global demand is also showing signs of weakness. The International Energy Agency now expects a decline in global oil demand in 2026, after a notable downward revision of its forecasts.
High prices, supply disruptions, and the contraction of certain flows of refined products weighed on deliveries, particularly in the second quarter. The price relief does not mean the market is abundantly supplied.
