Brent crude fell for a third straight session as Saudi Aramco steered more September cargoes around the Strait of Hormuz and diplomatic contacts between Oman and Iran resumed. Prediction markets now assign low odds to a fresh oil price high by the end of September.
Brent crude futures fell more than 2% on Wednesday, sliding to roughly $86 per barrel, the third straight daily decline. If the move holds, it would mark the biggest weekly drop in oil prices since June.
Aramco reroutes cargoes around the strait
Saudi Aramco has increased oil offerings for September loading outside the Strait of Hormuz, according to a Reuters report citing people familiar with the matter. The state producer has launched a sales process for Arab Medium and Arab Heavy crude with Asian buyers for a second straight week, offering cargoes through ship-to-ship transfers off Fujairah in the United Arab Emirates or Sohar in Oman — both outside the strait.
Shipping data shows Aramco has also been moving cargoes through the strait itself using tankers with tracking systems turned off to avoid attacks. Two supertankers carrying 4 million barrels of Saudi crude are heading to China after loading via ship-to-ship transfers off Sohar, according to shipping-data providers Vortexa and Kpler, with both cargoes destined for Sinopec. Aramco separately sold at least 4 million barrels of heavier grades to PetroChina and Sinochem last week after restarting loading at the Ras Tanura port earlier in August.
The waterway handled one-fifth of global oil and gas flows before the U.S.-Iran conflict began on February 28. Official data on strait traffic suggests only a limited volume is currently getting through it directly.
Diplomatic signals cool the market
The price retreat appears rooted in a belief that the kinetic conflict may be on hold as Washington shifts its focus toward economic sanctions. Markets were cheered by news that talks have resumed between Oman and Iran about making the Gulf navigable again, at least temporarily. U.S. Energy Secretary Chris Wright has claimed a significant amount of oil is still exiting the strait, even as ships travel with transponders switched off.
Costs for refined products such as diesel remain elevated even as crude oil prices ease, and the retreat has also had a cushioning effect on jittery bond markets this week.
Prediction markets price a low chance of new highs
Prediction-market activity tracked by Reuters suggests participants may believe the Iran conflict is de-escalating, which could be contributing to the decline in oil prices. Odds for crude reaching a new all-time high by September 30 remain low, currently priced at 2% YES. Any further statements from OPEC or Saudi Arabia's energy ministry, or new developments in U.S.-Iran relations, could still shift that geopolitical risk pricing.
Sources: Investing.com, Investing.com, Crypto Briefing
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