Oil prices fall on hopes Strait of Hormuz could reopen
Brent crude drops nearly 5% to under $80 a barrel as senior US officials report progress in talks to reopen the vital Strait of Hormuz.
Stock photo for illustration only, not from the actual event
- Brent crude falls nearly 5% to drop below $80 per barrel
- US officials signal a potential deal to reopen the Strait of Hormuz
- Iran states it is negotiating through Oman rather than directly with the US
- Global oil markets remain highly volatile amid ongoing geopolitical tensions
Oil prices tumbled to a three-week low on Tuesday as senior US officials raised hopes of securing a deal with Iran to reopen the critical Strait of Hormuz waterway.
US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both announced that discussions had progressed sufficiently to potentially allow shipping shipments to resume as early as this week.
The cost of a barrel of Brent crude, the global benchmark, dropped by almost 5% to under $80 or roughly 60 pounds, following news that supply disruptions might soon ease. Meanwhile, US West Texas Intermediate prices fell more than 5% to $76 a barrel, with both contracts hitting their lowest levels since July 13.
The Strait of Hormuz represents a vital global choke point. Before the conflict erupted in late February, the waterway handled approximately one-fifth of daily global oil and liquefied natural gas supplies. This severe disruption has driven up pump prices worldwide, pushing costs past $120 during escalations while delivering bumper profits to major oil corporations such as BP, Shell, Chevron, and Exxon Mobil.
Bessent told CNBC that there was a chance a deal could be reached as soon as Tuesday or Wednesday to open the strait and move toward a more normalized position in the conflict. He added that it would involve freedom of movement when asked if Iran would be permitted to charge vessels passing through.
Stock photo for illustration only, not from the actual event
Despite optimistic announcements from high-ranking US figures, no specific details regarding a potential agreement have been released. Iran maintained that it is not negotiating with the United States and has no plans to do so, choosing instead to hold talks through Oman.
A spokesman for Iran's foreign ministry described discussions with Oman—acting as a mediator—regarding a new mechanism for vessels navigating the Strait as positive. Qatar, another key mediator between Washington and Tehran, stated it was continuing diplomatic efforts, though it admitted no direct talks were currently planned.
"Chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict."
Scott Bessent
On Monday, Donald Trump warned that Iran was facing its last chance to agree on a deal allowing commercial shipping to resume in the Strait, noting he had called off massive strikes on the country to give negotiations a chance.
Source: BBC Business
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