Oil back to pre-war levels as Hormuz traffic rebounds, US reassures Gulf allies

Key Facts

In a positive development for energy markets, oil prices have returned to pre-war levels as traffic through the Strait of Hormuz rebounds and the United States moves to reassure its Gulf allies, according to Reuters reports. This development removes the geopolitical premium that had lifted prices since the conflict erupted, easing supply fears through the vital chokepoint through which about a fifth of global output passes.

The resumption of normal navigation through Hormuz has strengthened expectations of ample supply, while Washington continues its diplomatic efforts to ease tensions with Gulf states. These developments follow months of disruption that had driven prices sharply higher, with the strait acting as a key bottleneck for oil markets. Analysts say the reduction in geopolitical risk removes one of the biggest sources of uncertainty that had supported prices.

Traders are now focusing on fundamental factors that could determine the price trajectory in the near term, including weekly US inventory data and upcoming OPEC+ meetings. With the war premium removed, attention shifts to the global supply-demand balance, amid concerns of slowing demand in major economies.