WTI holds losses near $75.50 on easing supply concerns

West Texas Intermediate (WTI) oil price remains subdued for the fifth successive day, trading around $75.60 per barrel during the European hours on Wednesday. Crude oil prices declined as investors weighed the impact of an upcoming United States (US)-Iran peace deal. However, the market’s downward momentum was partially cushioned by ongoing uncertainty surrounding the full resumption of shipping through the critical Strait of Hormuz.

The US and Iran are scheduled to sign an interim accord in Switzerland this Friday, which will grant Tehran broad economic incentives and pave the way for an immediate resumption of Iranian oil exports. In anticipation of the formal signing, shipping data shows that at least three tankers carrying Iranian oil have already successfully breached the US naval blockade, while a fourth, empty vessel is currently en route to the Gulf of Oman.

Despite this diplomatic progress, experts warn that a physical recovery will take time. Markets are broadly stripping out the embedded geopolitical risk premium in oil prices, but the path toward normalization remains far from straightforward. While political agreements are progressing smoothly, actual physical tanker traffic through the Strait has yet to fully recover to its baseline levels.

This shifting supply caused the broader Middle Eastern crude market to weaken sharply this week, with key benchmarks slipping into deep discounts. Reuters data revealed that the benchmark Dubai's premium to swaps fell into a discount of 46 cents on Tuesday, marking its first contango structure since January. Similarly, spot Oman and Murban differentials flipped into discounts of 67 and 49 cents, respectively. This widespread shift into contango, a market structure where prompt cargoes trade at a discount to later-dated ones, is a clear signal to investors that near-term global supplies are becoming ample.