US crude futures fall, Brent down nearly 3%

Oil prices fell sharply in early Asian trade, extending losses after recent volatility tied to disruptions around the Strait of Hormuz began to ease and tanker traffic showed tentative signs of recovery.

Market data at 9:27 a.m. Tokyo time showed:

The declines reflect a cooling of the risk premium that had built up over weeks of near-paralysis in shipping through Hormuz, the narrow waterway that handles roughly a fifth of global oil flows.

The June contract is set to ⁠expire ​on Tuesday.

Over the weekend, maritime tracking data showed a notable "rebound" in commercial vessel movements through the strait after hitting wartime lows earlier this month. Iranian state media also signaled that more ships were being allowed to transit, a shift traders interpret as a partial de-escalation in the de facto maritime standoff that had spooked insurers, shippers and energy markets since late February.

For weeks, oil prices had been supported by fears that attacks, inspections, or blockades in Hormuz could severely constrain Gulf exports from Saudi Arabia, the UAE, Iraq and Kuwait.

That threat drove Brent above $110 and pushed Asian benchmarks such as Murban higher as refiners scrambled to secure alternative supply.

Tuesday’s pullback suggests traders are reassessing how much disruption is likely to persist. While traffic remains below pre-conflict norms and insurance costs are still elevated, the worst-case scenario of a prolonged closure now appears less imminent.

Analysts say the market is shifting from “panic pricing” to a more measured assessment of actual flows:

The move is particularly significant for Asian buyers. Japan, South Korea, India and China depend heavily on Gulf crude grades such as Murban and Arab Light. Any sustained disruption in Hormuz disproportionately affects refiners east of Suez, which explains why Murban had rallied strongly in previous sessions.

The current decline indicates refiners and traders see a lower probability of outright supply interruption — at least for now.

Despite the drop, prices remain elevated compared with pre-conflict levels, underscoring how sensitive markets remain to headlines from the Gulf.

Traders caution that any renewed incident at sea, military strike, or declaration of shipping restrictions could quickly reverse the slide.

For now, however, early Tuesday trading shows the oil market taking its first real breath after weeks of pricing in the possibility that the world’s most critical oil artery might seize up.