Oil prices tumble after Bessent says Strait of Hormuz deal may come this week

Oil prices plummeted on Tuesday following comments from Treasury Secretary Scott Bessent suggesting a potential deal to open the Strait of Hormuz within the coming week. Brent, the global oil benchmark, dropped 5.3% to reach $79.36 per barrel, while West Texas Intermediate futures fell by 5.7% to settle at $75.77.

In an interview with CNBC's "Squawk Box," Bessent revealed ongoing negotiations with Iran, hinting at the possibility of a deal being reached either today or tomorrow to restore normalcy to the situation. He clarified that the deal would entail freedom of movement, adding that Iran might be permitted to clear mines from the Strait. Diplomats briefed by Bloomberg News indicated that Tehran is contemplating allowing European countries to address the mines obstructing maritime traffic in the region.

The U.S. ended a major assault on Iran over the weekend to facilitate talks surrounding the Strait of Hormuz. The previous agreement signed on June 17 to reopen the strait, however, promptly unraveled. Iran seeks commercial vessels to traverse the Strait using its territorial waters, and it has persistently targeted ships navigating through the strait near Oman under U.S. military surveillance.

A cargo vessel was struck by an unidentified projectile approximately 20 nautical miles northeast of Al Khasab, Oman, according to an incident report from the United Kingdom Maritime Trade Operations Centre. Analysts remain skeptical about the prospect of a successful deal, with Ryan McKay, TD Securities' director of commodity strategy, asserting that Iran is unlikely to agree to any arrangement without securing control over the Strait.

Consequently, he views any potential agreement as highly improbable to succeed. McKay emphasized that oil exports through Hormuz are expected to remain consistent with the anticipated production recovery, suggesting that the upside for increased flows, even with a comprehensive deal, would be marginal.