Oil prices fall back to preconflict levels, but Trump's comments on Iran show that supply risks remain

By Myra P. Saefong

Here's why WTI crude may mark a near-term bottom at $65 to $70 a barrel

Maritime traffic through the Strait of Hormuz remained active on June 23 following last week's interim agreement between the U.S. and Iran, with 31 verified commercial and energy-linked vessels transiting the waterway, according to Kpler.

U.S. and global benchmark oil prices have dropped back to levels they haven't seen since before the U.S.-Israeli war with Iran started at the end of February, but it's not because risks associated with the conflict have suddenly disappeared.

President Donald Trump Wednesday showed that risks to global supplies remain high, as he appeared to compliment but also threaten Iran.

"I see that oil just broke the $70 number," Trump told reporters at the U.S. Capitol after a meeting with Senate Republicans. U.S. benchmark West Texas Intermediate crude briefly touched lows under $70 during the session.

"Who would have thought that was going to happen? And that's during a war, and Iran is being very nice," Trump said. "They're agreeing to everything that I want and they have to, otherwise we just go back and do what we have to do."

On Wednesday, West Texas Intermediate crude for August delivery (CLQ26) (CL.1) fell by 3.9% to settle at $70.34 a barrel on the New York Mercantile Exchange. The settlement was the lowest since Feb. 27, the last trading day before the Iran war began, according to Dow Jones Market Data.

Global benchmark Brent crude for August delivery (BRNQ26) lost 4.3% to end at $73.74 a barrel on ICE Futures Europe, also the lowest finish since Feb. 27.

"Prices are not falling because the market suddenly believes the geopolitical risk has vanished," said Stephen Innes, managing partner at SPI Asset Management. "They are falling because the physical-flow picture is improving faster than expected."

Traffic through the Strait of Hormuz is beginning to resume, "tanker by tanker, and that is enough for traders to start removing the immediate closure premium that had been stuffed into the barrel," Innes told MarketWatch by email, referring to oil prices.

Maritime traffic through the strait remained active on Tuesday, with 31 verified commercial and energy-linked vessels transiting the waterway, according to commodity data and analytics platform Kpler. In a Wednesday post on X, Kpler said the strait "appears operational" under the U.S.-Iran memorandum of understanding, but that dark-route activity - referring to some vessels that switch off their automatic identification system to move through the strait - and uncertainty behind the 60-day agreement window are keeping the recovery "cautious."

Traffic through Hormuz is not fully normalized, Innes said. Before the war began, Kpler data showed that more than 100 vessels carrying oil and other goods transited the waterway per day.

Some sources indicate that ship traffic through Hormuz remains at roughly one-fifth of preconflict traffic volumes, said Tyler Richey, editor of Sevens Report Technicals. Pair that with lingering geopolitical uncertainty, the U.S. Strategic Petroleum Reserve sitting at a more than four-decade low and consumer demand remaining resilient year to date, and the "pieces are falling into place for oil prices to establish a near-term bottom," potentially in the $65 to $70 range for WTI, he said.

Data released Wednesday by the Energy Information Administration, meanwhile, showed another significant drawdown in U.S. commercial crude supplies, which fell by 6.1 million barrels for the week that ended June 19. Analysts surveyed by the Wall Street Journal had forecast a smaller 4.1 million decline.

Despite resilient consumer demand and depressed global inventories, however, it may be difficult for prices to climb above $85 to $90, Richey said. Consumer demand appeared to slow in the first half of this year when prices held above those levels, he said.

Victor Reklaitis contributed.

-Myra P. Saefong

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06-24-26 1530ET