The Commodities Feed: Oil declines as Strait of Hormuz begins to normalise
Lead — Oil prices are sharply declining as the Strait of Hormuz experiences a normalization of shipping flows, easing previous concerns over supply disruptions. Per the full note from ing-think, NYMEX WTI has dropped more than 10% from last week’s close. With Kuwait signaling a gradual restart in production, the desk anticipates a continued decrease in oil prices, impacting related currency pairs and market sentiment over the coming weeks.
What the desk is arguing
The desk posits that the easing of shipping disruptions in the Strait of Hormuz will lead to decreasing oil prices, with potential implications for FX markets. Per the full note from ing-think, about 10 million barrels are expected to resume transit through the strait, although flows remain below the typical rate of around 20 million barrels per day.
With OPEC maintaining a long-term constructive outlook on demand, supported by regional growth in Asia, the Middle East, and Africa, the desk notes that this contrasts starkly with the International Energy Agency's perspective of declining global oil demand. The decline in refined product inventories indicates a tightening in the market even as oil prices fall, suggesting additional complexity in the demand-supply balance.
Where it sits in our coverage
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How other firms see it
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What the calendar says
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How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Oil prices are on track for a sharp weekly decline.
- 02Shipping through the Strait of Hormuz has begun to normalize, easing disruption concerns.
- 03OPEC maintains a constructive long-term demand outlook, while the IEA foresees a decline in oil demand.
- 04Refined product inventories show mixed trends, impacting short-term pricing.
Market implications
Watch for oil prices around the $70 a barrel mark, as a sustained drop below this level could trigger a broader sell-off in energy-related currencies like CAD and NOK. Additionally, monitor positioning in these currencies as traders adjust to the evolving oil price landscape.
Risks to this view
A significant uptick in geopolitical tensions or unexpected supply cuts by OPEC could reverse the current trend, pulling oil prices back up and impacting currency valuations against key pairs such as USD/CAD and USD/NOK.
Articles The Commodities Feed: Oil declines as Strait of Hormuz begins to normalise 07:18 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil prices are on track for a sharp weekly decline, as shipping flows through the Strait of Hormuz begin to normalise and disruption concerns ease Ewa Manthey and Warren Patterson Energy - Oil falls on expectations of supply normalization Oil prices are on track for a weekly decline, with NYMEX WTI down more than 10% versus last week’s close. The move follows the start of normalisation in shipping through the Strait of Hormuz, easing what had been the largest recent disruption to global crude flows. Tankers previously stranded are resuming transit, with around 10m barrels exiting or moving through the strait.
This remains below typical flows of around 20m b/d, but the gap should narrow quickly as production recovers. Kuwait is already signalling a gradual restart. At the same time, OPEC’s latest World Oil Outlook maintains a constructive long-term demand outlook, driven by growth in Asia, the Middle East, Africa, and Latin America.
And an expected balance among energy security, affordability, and climate goals. This contrasts with the International Energy Agency’s view, which points to an eventual decline in global oil demand. Refined product data from Insights Global shows ARA stocks fell by 36kt week-on-week to 4.5mt (week ending 18 June).
Gasoline led declines, down 97kt to 1.04mt and remaining below the five-year average. This was partly offset by builds elsewhere: gasoil (+23kt to 1.8mt), jet fuel (+12kt to 547kt), naphtha (+17kt to 469kt, highest since April), and fuel oil (+9kt to 582kt). Concerns around summer supply availability persist.
In Singapore, total product inventories rose by 850k barrels to 35.3m, driven by builds in middle distillates and residual fuels, while light distillates fell by 633k barrels. In gas, Henry Hub futures rose 2.8% after the Energy Information Administration reported a smaller-than-expected storage build of 73bcf (vs. 78bcf expected). Inventories stand at 2.76tcf, slightly below last year but above the five-year average.
Stronger LNG exports are tightening domestic balances, although higher production continues to cap upside. LME copper prices fell around 1% yesterday, reversing earlier gains after Fed Chair Kevin Warsh signalled a more hawkish stance. Markets now fully price in a 25bp rate hike by October, with tighter policy expectations offsetting the earlier risk-on move following the US–Iran interim agreement.
Higher rates weigh on copper through a stronger dollar and higher financing costs. Market participants are also awaiting President Donald Trump’s decision on potential tariffs on refined copper. They could reshape trade flows, shift inventories, and widen regional price differentials.
Precious metals extended losses, with gold and silver down more than 3% and 10%, respectively, over the past two days. Spot gold is holding near $4,130/oz, while silver remains below $64/oz, both pressured by the Fed’s hawkish shift. Higher rate expectations continue to weigh on non-yielding assets via a stronger dollar and higher opportunity costs.
Agriculture - Cocoa prices slump on weaker demand Cocoa prices came under pressure, with New York futures falling up to 4%. This was driven by a stronger US dollar and rising US inventories, signalling softer demand. ICE-certified stocks at US ports rose by 31.8k bags for a ninth consecutive session to 575k bags (as of 17 June).
The stronger dollar added further downside by making cocoa more expensive for non-US buyers. US soybean export sales rose to 729kt (week ending 11 June), up from 352.8kt the previous week and above expectations, supported by potential Chinese demand. Corn exports reached 1,676kt, down week-on-week but still above expectations and last year’s levels.
US wheat shipments came in at 427.7kt, lower than the previous week but slightly ahead of expectations and marginally above last year. Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore.
He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… In this article Energy - Oil falls on expectations of supply normalization Agriculture - Cocoa prices slump on weaker demand
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