There was a big decline in the oil markets around the world on Wednesday. The price of WTI Crude Oil fell by about 6 percent to $ 88.3 per barrel. The main reason for this was the statement from Iran, in which it was said that Tehran is committed to restoring normal commercial shipping in the Strait of Hormuz within a month.
Why is the Strait of Hormuz important?
The Strait of Hormuz is considered one of the most important oil routes in the world. About 20 percent of the world’s crude oil and LNG supply passes through this route. In such a situation, any kind of tension here affects the global energy market.
In recent times, due to war-like situation and tension, the movement of ships on this route was affected. But now the situation seems to be improving. At least two foreign supertankers passed through this route on Tuesday. For the first time after about a week, about 4 million barrels of crude oil passed through this route without any restriction.
Oil prices fell by more than 16 percent in May
After seeing a rise in March and April, oil prices are now continuously falling. So far in the month of May, oil prices have fallen by more than 16 percent and have reached their lowest level in almost five weeks. There is increased hope in the market that progress is being made towards an agreement between the United States and Iran, due to which the Strait of Hormuz can be fully reopened.
Eye on US-Iran talks
An Iranian official has said that indirect talks with Washington are still going on. Meanwhile, US Secretary of State Marco Rubio said that it may take a few more days to finalize the peace agreement. Experts believe that if an agreement is reached between the two countries and oil supply remains normal, then further softening of crude oil prices may be seen in the future.
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