Oil falls for third day on signs of progress towards Hormuz deal
Qatar said on Aug 4 that an interim proposal had been drafted.
Oil prices continued to plummet for a third consecutive day as hopes grew for a breakthrough in negotiations aimed at reopening the Strait of Hormuz. Brent crude slipped below $79 per barrel, while West Texas Intermediate (WTI) edged closer to the $75 mark, following a loss of over 10% over the previous two sessions. Qatar announced on August 4 that an interim proposal for a deal had been drafted, and both Washington and Tehran indicated progress in talks to restore access to the vital waterway.
The recent decline in oil prices can be attributed to US President Donald Trump's decision to postpone new strikes on Iran, granting more time for diplomatic efforts. Even if a short-term agreement to resume commercial shipping in the strait were to be reached, it may not fully resolve the ongoing conflict or address Trump's concerns regarding Iran's nuclear program.
Robert Yawger, director of the energy futures division at Mizuho Securities, suggested that while there is a possibility of reaching an agreement, he anticipates that the deal would likely be "bad" and leave numerous unresolved issues, including the nuclear deal.
The previous US-Iran ceasefire only lasted for a month before it was shattered over Hormuz, which contributed to a significant $32 swing in Brent prices in July when tensions escalated once again in the Red Sea. However, a brief pause in late July for diplomatic attempts was subsequently disrupted. President Trump engaged in discussions with Qatar's Emir, Sheikh Tamim bin Hamad Al Thani, regarding efforts to ease US-Iran tensions on August 4, according to a White House official.
Signs of potential progress were noted when Iran reportedly considered allowing European nations to clear mines from the strait, as per diplomats familiar with the matter. Additionally, Iran's Foreign Ministry revealed that discussions between Tehran and Oman had been successful, focusing on safe routes through the waterway, according to state-run IRIB News.
Meanwhile, Saudi Arabia was actively engaged in talks with Yemen's Houthi rebels through Omani mediators to prevent the conflict from escalating further. Despite these developments, the OPEC member remains prepared to implement military options if negotiations prove unsuccessful.
In another noteworthy development, US crude inventories surged by 2.7 million barrels last week, while stockpiles at Cushing, Oklahoma – the primary delivery hub for WTI – increased by 2.4 million barrels. If confirmed by official data on August 5, this would represent the largest rise in Cushing since March, potentially bringing levels back above the widely considered operational minimum of 20 million barrels.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
