Global oil prices dropped by more than 1% on Wednesday, bringing crude close to its lowest level in four months as concerns over supply disruptions in the Strait of Hormuz continued to fade.

Brent crude futures fell 78 cents, or 1%, to $76.30 per barrel, while US West Texas Intermediate (WTI) crude declined 78 cents, or 1.1%, to $72.43 per barrel. Both benchmarks had already lost nearly 1% in the previous session and touched their lowest levels since early March.

Market analysts said investor confidence improved after signs emerged that more oil tankers stranded in the Gulf region could safely pass through the Strait of Hormuz. Although shipping traffic has increased in recent days, it remains below pre-conflict levels.

Oil prices also came under pressure after the United States granted Iran a 60-day sanctions relief period, allowing Tehran to continue oil exports. Reduced tensions in Lebanon further eased market concerns about regional instability.

According to Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting, expectations of smoother oil flows through the Strait of Hormuz and improving US-Iran relations have weighed on crude prices. He said prices could return to pre-conflict levels if progress is made in nuclear negotiations.

Meanwhile, Oman and Iran agreed to continue discussions on shipping arrangements in the strategic waterway. US Secretary of State Marco Rubio warned that any attempt by Iran to charge transit fees on passing vessels would violate international law.

Data from the American Petroleum Institute showed US crude inventories fell by 765,000 barrels in the week ending June 19, compared with market expectations of a 4.5 million-barrel decline.

Experts believe future oil price movements will largely depend on Middle East export recovery and developments in US-Iran negotiations.