WTI Oil drifts closer to $80.00 amid a mild increase in traffic through Hormuz 

• WTI prices hit session lows near $80.00 amid hopes of some normalisation of crude Oil traffic.
• The Commonwealth Bank of Australia reported an increase in Hormuz traffic to 30%-35% of pre-war levels.
• Analysts at TD keep thinking that the reduced flows are supportive of further upside in oil prices.

Oil prices are ticking lower for the second consecutive day on Friday, with the US benchmark West Texas Intermediate (WTI) barrel hitting session lows a few cents above $80.00. News reporting a moderate recovery of sea traffic through the Strait of Hormuz has pushed prices lower, although WTI Oil is on track to close the month with a more than 15% appreciation.

The Commonwealth Bank of Australia released a note earlier on Friday reporting that Oil traffic through the key waterway had increased to roughly 30%-35% of pre-war levels and that an increase to levels from 50% to 60% of the traffic seen before the conflict started could be enough to reassert oversupply conditions in global markets. 

Beyond that, Saudi Arabia affirmed that it has set up a coalition of 14 countries to secure key sea routes from attacks by Iran or its allies, which added negative pressure on Crude prices.

Tensions in the Gulf are keeping Oil supported

Meanwhile, tensions remain high in the Gulf, as Tehran attacked US bases in Kuwait, a few hours after Jordanian air defences reported the interception of missiles launched from Iran. US President Donald Trump stated that he has reached a deal to disarm Hamas, and for Israel to withdraw from Gaza, but, apparently, key hurdles should be overcome first.

Experts at TD Securities, on the other hand, show a cautious view, as disruptions keep contributing to “reduced flows and global tightening of the energy market,” which the bank views as “supportive of further upside in crude oil.” The strategists argue that the tightening in physical balances is increasingly underpinning the bullish case for prices, even as positioning dynamics remain in flux.