Impact of U.S. Waiver on Iranian Oil Sanctions

U.S. crude prices dropped 2.7% on Monday to roughly $74 per barrel. This occurred after Treasury Secretary Scott Bessent announced a 60-day waiver of sanctions on purchasing Iranian oil. It marked the first time crude prices had dipped below $75 since early March. In a similar movement, international Brent crude prices declined by 4% to about $77 per barrel, their lowest since the start of the Iran conflict. However, both prices remain above their prewar levels of $62 and $68 per barrel, respectively.

Kpler data from the Strait of Hormuz indicated a reduction in crossings, with 17 on Sunday, down from 35 on Saturday and 19 on Friday. Kpler provides tracking data through the MarineTraffic website.

In a statement on social media, Bessent conveyed Iran’s commitment to allowing free and open transit in the Strait of Hormuz. Despite this announcement, market optimism could be premature due to ongoing negotiations and shifting dynamics in the region. On Saturday, Iran threatened to close the strait again over Israeli activities in Lebanon.

Ship traffic through the Strait of Hormuz began to pick up this past weekend, although it remains below prewar levels. From Friday through Sunday, there were an average of 23 daily transits, an increase from single-digit levels observed during the peak of the war in April. Yet, this figure is still below the prewar daily average of 130 vessels. Kpler’s report highlighted that most ships used designated routes by Iran or turned off their transponders during transit.

The key point is not that traffic stopped, but that traffic continued while using less standard/less transparent routing,” Kpler noted.

Besides oil, other commodities are moving back to prewar prices. The commodities group Argus reported a 50% decrease in the price of urea, a critical fertilizer ingredient, from the peak in April.