Oil prices drop back to pre-Iran conflict levels, but Canadians won't see relief at the pumps yet

CALGARY — Global oil prices have dropped back to levels seen before the start of the Iran conflict and the closure of the Strait of Hormuz, but Canadians won’t be seeing gasoline prices fall significantly at the pumps anytime soon.West Texas Intermediate (WTI) crude prices were trading around US$71 per barrel Thursday morning after sharply dropping in recent days as fears of a prolonged disruption to oil shipments through the Strait have eased — a far cry from a month ago, when oil was trading at over US$100 and talk of oil hitting US$150 was widespread.The price decline follows a preliminary agreement between the United States and Iran to allow oil tankers to resume traffic through the strategically important waterway, helping to clear a backlog of oil tankers that had been stranded in the Persian Gulf..‘LET THE OIL FLOW’: Crude prices plunge after Trump announces Iran deal, Hormuz reopening.On Wednesday, roughly 70 vessels — including 29 oil tankers — transited through the Strait, making it the busiest day for traffic there since March 1, according to maritime analytics from Kpler.Reuters reports three tankers carrying roughly five million barrels of crude also departed the waterway on Wednesday, with two bound for Asia, further easing concerns over global supply shortages.Middle Eastern oil exports are now expected to reach a four-month high this month as Iraq, Saudi Arabia and Oman increase shipments from ports located outside the Persian Gulf.Ship-tracking data estimates regional fuel oil exports will now rise roughly 20% from May levels to approximately 508,000 barrels per day.Despite the decline in crude prices, Canadian motorists shouldn’t expect an immediate drop in gas prices.Retail fuel prices usually lag behind movements in crude markets, and industry analysts say that delay is likely to be even longer this time because US refineries have been drawing heavily from crude inventories..US permitting Iranian tankers through Strait of Hormuz to keep oil markets supplied.According to a US Energy Information Administration report released this week, US crude inventories fell by more than 15 million barrels last week, leaving stockpiles at their lowest level since 1984.Refiners are also consuming stored crude faster than inventories are being replenished, helping keep wholesale fuel prices elevated even as benchmark oil prices fall.That means gasoline prices in Canada could remain higher than expected well into the fall despite easing geopolitical tensions and lower global crude oil prices.The developments also come as Canada continues to debate how to expand its energy export capacity, with roughly a week remaining before the Alberta government’s anticipated July 1 deadline for announcing details of its proposed one-million-barrel-per-day pipeline to the BC coast.

Oil prices drop back to pre-Iran conflict levels, but Canadians won't see relief at the pumps yet

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