US-Iran war: Oil prices remained under pressure after falling for two consecutive sessions, amid optimism that a deal could be reached to reopen the Strait of Hormuz and restore the flow of crude supplies from the Persian Gulf.
Brent crude traded below $80 a barrel, while West Texas Intermediate (WTI) hovered near $76 after plunging more than 10% over the previous two trading sessions.
What’s driving crude oil prices?
Qatar announced on Tuesday that an interim proposal had been prepared, while both the United States and Iran indicated progress in negotiations aimed at reopening the Strait of Hormuz.
Oil prices have fallen sharply over the past two weeks after US President Donald Trump said he had delayed fresh military strikes on Iran to allow more time for diplomatic talks. However, even if a temporary agreement is reached to restore commercial shipping through the strait, it may not bring a lasting end to the conflict or address Washington’s concerns over Iran’s nuclear programme.
The previous ceasefire between the US and Iran lasted less than a month before breaking down over tensions surrounding the Strait of Hormuz. The renewed conflict triggered a nearly $32 swing in Brent crude prices last month as hostilities spread to the Red Sea. A later pause in fighting during late July, intended to support diplomatic efforts, also eventually collapsed.
According to a Bloomberg report, Trump also spoke with Qatar’s Emir, Sheikh Tamim Bin Hamad Al-Thani, on Tuesday to discuss efforts to ease tensions between Washington and Tehran, according to the Qatari government. The White House confirmed the call but did not disclose further details.
In another sign of possible diplomatic progress, Iran is reportedly considering allowing European countries to clear mines from the Strait of Hormuz, according to diplomats familiar with the discussions. Separately, Iran’s foreign ministry said talks with Oman had been constructive and focused on ensuring safe navigation through the strategic waterway, state-run IRIB News reported.
Meanwhile, Saudi Arabia has held discussions with Yemen’s Houthi rebels through Omani mediators in an effort to prevent the conflict from expanding, according to people familiar with the matter. Sources added that the kingdom is also preparing military contingency plans in case negotiations fail.
On the supply side, US crude oil inventories increased by 2.7 million barrels last week, while stockpiles at Cushing, Oklahoma—the delivery hub for WTI crude—rose by 2.4 million barrels. If confirmed by official government data later on Wednesday, it would mark the largest weekly increase at Cushing since March and push inventories back above the 20 million-barrel level, which is widely viewed as the minimum required for smooth operations.
(With inputs from Bloomberg)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
