Shares in the oil sector are experiencing a broad decline. At the time of writing, CHINA OILFIELD (ASX: 02883) fell 3.62% to HK$6.92. PETROCHINA (ASX: 00857) dropped 3.42% to HK$9.12. CNOOC (ASX: 00883) was down 3.06% at HK$22.14, while SINOPEC CORP (ASX: 00386) decreased by 2.59% to HK$4.14.

Key Market Drivers

International oil prices continued to fall on June 18th. Brent crude futures extended losses by more than 2% to $77.51 per barrel. West Texas Intermediate crude dropped below $74 per barrel, hitting its lowest level since early March.

Geopolitical Developments

Reports indicate that the United States and Iran have remotely signed a memorandum of understanding aimed at ending conflict and reopening the Strait of Hormuz, with the agreement now in effect. The signing ceremony, initially scheduled for the 19th in Switzerland, was conducted remotely.

Industry Outlook

In its latest monthly report, the International Energy Agency stated that while the global oil market is set for a strong recovery following supply shocks from Middle East conflicts, it will take months for shipping through the Strait of Hormuz to return to normal. The report forecasts that as this critical maritime energy chokepoint gradually reopens, global oil supply is expected to increase by 8 million barrels per day by 2027. This surge could lead to a significant market surplus, potentially creating an opportunity to replenish depleted inventories.