Oil prices are plummeting due to a perceived oversupply following a U.S.-Iran ceasefire. Tanker traffic is increasing out of the Strait of Hormuz, but this mainly consists of previously stranded vessels being released. Despite this, Iran recently struck a commercial ship in the same critical waterway, raising immediate concerns. The market is discounting crude prices significantly, with Angolan crude seeing its steepest discount in a decade. Chinese refiners are also reportedly selling crude cargoes, contributing to the downward pressure.Analysts are surprised by the speed of the price drop, attributing it to market rebalancing through demand losses and inventory withdrawals. However, some caution that the increased outflow from Hormuz primarily reflects stranded ships rather than new supply entering. Insurance and the sustainability of the ceasefire remain significant uncertainties for future tanker movements. The U.S. strategic petroleum reserve is at a four-decade low, and China is drawing down its own inventories.This drawdown of inventories suggests that the market has been relying on stored oil to meet demand. As flows out of the Persian Gulf improve, China may resume buying, but this depends on them selling current cargoes. The low U.S. SPR levels indicate vulnerability if supply disruptions occur. The market is closely watching if traffic will resume or if geopolitical hurdles will halt planned production increases.