Oil prices fell on hopes to reopen Strait of Hormuz following Iran-Oman talks
Oil prices plummeted by more than $2 a barrel on Wednesday, reaching a two-week low, as talks between Iran and Oman revived hopes that the Strait of Hormuz could be reopened, providing a solution to shipping restrictions affecting key supplies in the Middle East.
Brent crude futures fell $2.25, or 2.54%, to $86.33 a barrel as of 08:10 GMT, hitting their lowest level since August 13. WTI crude futures also fell $2.21, or 2.68%, to $80.15, their lowest level since August 10.
Negotiations between Iran and Oman regarding an agreement on the transit of oil and other petrochemicals through the Strait of Hormuz are creating a sense of optimism.
Iran, facing increasing economic pressure from Trump, said it has resumed talks with Oman to take control of the Strait.
Intermittent talks have been ongoing for weeks over control of the vital waterway, which carried about a fifth of global oil and liquefied natural gas shipments before the US-Israel-Iran war began in February.
Iran and Oman announced on Tuesday that they discussed a "joint temporary navigation corridor" through the strait and agreed on clearing the strait of mines.
While the talks continue, ship traffic through the Strait of Hormuz remains low. Data shows only five commercial vessels passed through the waterway on Tuesday; below the 10-day average of 15 and well below pre-war levels.
Negotiations also continue towards a complete end to the conflict. Pakistan's Interior Minister said on Tuesday, at the end of his visit to Tehran, that Pakistan and Iran had made "significant progress" in talks focusing on the US-Israeli war and peace process with Iran.
On Monday, Washington threatened to punish countries continuing to do business with Tehran by expanding sanctions aimed at cutting off Iran's economic lifeline, but indicated it would not immediately implement sanctions.
In the US, crude oil inventories rose by approximately 4.2 million barrels in the week ending August 21, according to the American Petroleum Institute (API).
Analysts had predicted an average increase of 600,000 barrels. Official data from the EIA, the US Department of Energy's statistics unit, will be released Wednesday at 2:30 PM GMT.
Related Articles
Investors didn't take US sanctions on Iran seriously; oil prices closed lower
Supply risks persist, oil continues to fall on hopes that talks in the Middle East will ease supply issues
Oil prices fell ahead of the US announcement of new sanctions on Iran