Oil prices fall on Iran-Oman talks to reopen Strait of Hormuz

Oil prices fell sharply this week as diplomatic efforts between Iran and Oman raised hopes of reopening the Strait of Hormuz, a vital waterway for global energy supplies. Brent crude dropped below $85 a barrel for the first time in two weeks, while WTI fell to its lowest level since August 10, as traders weighed the prospects of a partial reopening against persistent geopolitical risks Source: Infobae.

Market reaction

On Wednesday, Brent fell 2.6% to $86.28, and WTI lost 2.53% to $80.29, after both benchmarks had already declined more than 3% the previous day Source: Infobae. Earlier in the session, Brent touched an intraday low of $84.71, a 4.3% drop, while WTI hit $79.70 Source: Infobae. The declines extended a multi-day losing streak, with WTI accumulating a near 6% loss over three sessions Source: Heraldo.

Diplomatic efforts

Iran and Oman have been holding intermittent talks on managing traffic through the strait, which before the conflict carried about a fifth of global oil and LNG supplies Source: Milenio. They announced discussions on a "temporary joint navigation corridor" and agreed to demine the area Source: Milenio. However, Iranian officials stressed that the plan does not imply an immediate reopening, with Deputy Foreign Minister Kazem Qaribabadi saying the strait will remain closed unless Iran's conditions are met Source: Infobae.

Conflicting signals

While some reports suggest progress, others highlight persistent risks. A tanker was hit by an unidentified projectile off Oman's coast on Tuesday, underscoring ongoing security threats Source: Milenio. Meanwhile, the US announced new sanctions against Iran, but traders largely dismissed them as less impactful than a military confrontation Source: Milenio. Analysts remain cautious: "If the Strait of Hormuz were to reopen more fully, a further drop in crude would be possible, but it is unlikely the market would discount an overnight return to pre-conflict levels," said Tim Waterer of KCM Source: La República.