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, easing shipping constraints and concerns over oil supplies from the Middle East.
Brent crude futures fell $2.30, or 2.6%, to $86.28 a barrel by 0447 GMT, after earlier touching their lowest level since August 13. US West Texas Intermediate (WTI) crude futures also declined $2.08, or 2.53%, to $80.29 a barrel, having earlier dropped to their lowest since August 10.
Both benchmarks fell by more than 3% on Tuesday.
Mitsuru Muraishi, an analyst at Fujitomi Securities, said the market was responding to developments surrounding navigation through the Strait of Hormuz, with hopes of progress in the Iran-Oman talks triggering fresh selling.
“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,” Muraishi said.
He added that uncertainty over the outlook was prompting some investors to buy at lower prices, limiting further losses and keeping oil prices likely to remain range-bound in the near term.
Iran said it had resumed talks with Oman on managing navigation through the strategic waterway as Tehran faces increased economic pressure from US President Donald Trump.
Iran and Oman have held intermittent discussions for weeks over the management of traffic through the Strait of Hormuz, a vital global energy route that handled about one-fifth of worldwide 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 establishing a “joint temporary navigational corridor” through the strait and agreed to undertake mine-clearing operations.
Despite the diplomatic efforts, shipping activity through Hormuz remains significantly below normal levels.
Preliminary data from ship-tracking firm Kpler showed that only five commodity vessels transited the waterway on Tuesday — two liquefied petroleum gas tankers, one bitumen tanker and two empty product tankers. That compares with a 10-day average of 15 vessels and remains well below pre-war traffic levels.
The prospect of a reopening of the strait has nevertheless eased some concerns over supply disruptions, putting downward pressure on crude prices.
