Oil Prices Fall as Iran-Oman Talks Raise Hopes of Hormuz Reopening

Oil prices fell by more than $2 a barrel on Wednesday as renewed talks between Iran and Oman raised hopes that the Strait of Hormuz could reopen and ease shipping restrictions affecting oil supplies.

Brent crude futures fell $2.30, or 2.6%, to $86.28 a barrel by 0947 PKT, after earlier reaching their lowest level since August 13. US West Texas Intermediate crude futures dropped $2.08, or 2.53%, to $80.29, after falling to their lowest since August 10.

Both benchmarks had fallen more than 3% on Tuesday.

“The market continues to react to developments surrounding navigation through the Strait ⁠of Hormuz, and hopes for progress in talks between Iran and Oman have triggered selling,” said Mitsuru Muraishi, an analyst at Fujitomi Securities.

“That said, uncertainty over the outlook has prompted bargain buying, limiting further losses, and prices ⁠are likely to remain range-bound for the time being,” he added.

Iran said it had resumed talks with Oman on managing traffic through the Strait of Hormuz as Tehran faces growing economic pressure from US President Donald Trump.

Iran and Oman have held talks for several weeks over the movement of ships through the waterway, which handled about one-fifth of global oil and liquefied natural gas shipments before the US-Israeli war against Iran began in February.

The two countries said on Tuesday that they had discussed “a joint temporary navigational corridor” through the strait and agreed to clear the waterway of mines.

However, ship traffic through Hormuz remains low. Kpler data showed that only five commodity vessels crossed the waterway on Tuesday, including two liquefied petroleum gas tankers and a bitumen tanker leaving the area, along with two empty product tankers.

The figure was below the 10-day average of 15 vessels and far lower than pre-war levels.

Talks aimed at ending the wider conflict are also continuing. Pakistan’s interior minister said Tuesday that Pakistan and Iran had made “significant progress” during discussions focused on the US-Israeli war on Iran and efforts to find a path towards peace.

On Monday, Washington expanded sanctions aimed at restricting Iran’s economy and warned that countries continuing to do business with Tehran could face penalties. However, the US said it would not impose the penalties immediately.

In the United States, the American Petroleum Institute reported that crude oil inventories increased by about 4.2 million barrels in the week ending August 21, according to market sources.

Reuters analysts had expected crude inventories to increase by around 600,000 barrels on average. Official data from the EIA, the statistical arm of the US Department of Energy, was due later on Wednesday.