Can we ever bypass the Strait of Hormuz and make regional supply chains conflict-proof?

Oil prices slipped to a three-week low on Tuesday as high-ranking US officials expressed optimism regarding a potential agreement with Iran to reopen the Strait of Hormuz. US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both confirmed that talks had advanced to the point where shipments might resume as early as this week.

The price of a barrel of Brent crude, the global benchmark for oil, dropped nearly 5% to below $80 following the news of a possible easing of supply constraints. However, the history of failed negotiations in recent months has created a volatile oil market, with consumers ultimately facing increased fuel costs at the gas pump. Alongside the decline in Brent crude, US West Texas Intermediate prices sank more than 5%, reaching $76 a barrel on Tuesday, both contracts setting their lowest levels since July 13.

At a press conference, Rubio stated that progress had been made in discussions with Iran and Oman, but finality had yet to be achieved. "There's been progress made in those talks, but not finality yet. We're hoping that will happen very shortly," he told reporters. Bessent added that a deal to reopen the Strait of Hormuz could be finalized as soon as Tuesday or Wednesday, potentially leading to an "opening of the strait and a move towards a more normalized position in this conflict," CNBC reported.

While government officials have indicated that discussions are progressing, no specifics about the potential deal's details have been disclosed. The Strait of Hormuz has been a focal point in US-Iran negotiations, previously handling approximately one-fifth of the global daily oil and liquefied natural gas supplies before the conflict escalated in late February.