Oil Prices Dip as Vance Cites Tanker Traffic Surge Through Strait of Hormuz

Oil prices fell Thursday after Vice President JD Vance said tankers with more than 12 million barrels crossed the Strait of Hormuz overnight.

"That is a high since the beginning of the conflict," Vance told reporters at a White House press briefing. CNBC was not immediately able to confirm the number. Around 14 million barrels per day of oil and 6 million bpd of refined products passed through Hormuz before the Iran war.

Brent crude futures, the international benchmark, fell 1.8% to $78.11 a barrel by 1:04 p.m. ET. West Texas Intermediate futures dropped about 2% to $75.27 per barrel.

President Donald Trump signed ​a deal Wednesday ​with his Iranian counterpart Masoud Pezeshkian to end the ​war in the Middle East. Under the agreement, Iran must allow ships to transit Hormuz without paying tolls for 60 days, while the U.S. is supposed to lift its naval blockade.

"The Iranians, for the second night in a row, did not shoot at any ships in the Strait of Hormuz," Vance told reporters. "So far they are honoring their end of the commitment."

"On the blockade, Centcom allowed north of a dozen ships to go through our naval blockade, and so we're also honoring our end of the early part of the agreement," the vice president said.

Ship tracker Kpler had not observed a major traffic increase as of Thursday morning. Three Saudi tankers carrying 6 million barrels did become visible in the Gulf of Oman. More than 100 ships, dozens of which were tankers, transited the strait daily before the Iran war.

"The floodgates haven't opened, there is no mass exodus as yet," said Matt Smith, director of commodity research at Kpler. Shippers still appear hesitant to cross Hormuz, Smith said.

Veteran oil analysts warn the opening of Hormuz will not necessarily resolve the massive supply disruption. The market will face a reckoning later this year when data shows the enormous the hole in oil supplies and inventories, said Bob McNally, president of Rapidan Energy.

The agreement between the U.S. and Iran is really a temporary truce, McNally told CNBC. "This is nothing more than an expensive ransom payment for about at least 65 million barrels that's trapped inside Hormuz," he said.

Trump hopes the deal will allow the Gulf Arab states to ramp production and prevent a summer supply crunch that analysts were warning about, said McNally, who was a senior energy advisor to President George W. Bush.

"He bought some time, he's bought some oil," the analyst said. "Let's see if it sticks and leads to that rebalancing, that reflow of supply that he hopes."

The oil market is not trading on fundamentals and has not been for months now, said Amrita Sen, founder of Energy Aspects. The market is looking past the fact that oil inventories have hit record low levels, an event that would normally force prices to rise, Sen said.

Instead, traders are focused on what happens when Hormuz reopens but ship traffic is unlikely to return to prewar levels, the analyst told CNBC.

"Everything's going to be more gradual," Sen said. "Initially, of course, the ships that are stuck will come out, but it's not going to be back to pre-conflict levels overnight."

— CNBC's Hugh Leask contributed to the report.