Oil Price Today (August 26): Crude oil tanks 6% in two days to hover near $85. What’s behind the decline?
Brent crude futures were down $2.35, or 2.65%, at $86 a barrel, while U.S. West Texas Intermediate crude futures fell $1.94, or 2.36%, to $80.42. Both benchmarks had declined more than 3% on Tuesday.
Oil prices plummeted 6% over two days, nearing $85 per barrel, on August 26. The decline was attributed to renewed optimism that the Strait of Hormuz might reopen after Iran and Oman resumed talks to manage the crucial waterway. This optimism triggered selling in the market.
Brent crude futures dropped $2.35, or 2.65%, to $86 a barrel, while U.S. West Texas Intermediate crude futures declined $1.94, or 2.36%, to $80.42. Both benchmarks experienced losses of over 3% on Tuesday.
Iran announced the resumption of talks with Oman about the Strait of Hormuz, amid heightened economic pressure from the U.S. President Donald Trump. The two nations have engaged in intermittent discussions for weeks over managing traffic through the waterway, which accounted for one-fifth of global oil and liquefied natural gas shipments prior to the war in February.
On Tuesday, an oil tanker was hit and disabled about 9 nautical miles northeast of Oman's Ash Shishah, at the entrance to the Strait. The incident occurred as tensions escalated following a series of U.S. sanctions aimed at cutting off Iran's economic lifeline.
The duration of any disruption in the Strait of Hormuz will significantly impact crude prices. JPMorgan estimates that each additional month of disruption could add $7 to $8 per barrel to Brent prices. If disruptions persist for three months, Brent prices could reach around $114 per barrel. Goldman Sachs anticipates a potential rise to $120 per barrel if the Strait remains closed, while still projecting a base case scenario of $80 per barrel for the fourth quarter and $75 per barrel next year.
The bank warns that risks remain tilted to the upside due to potential prolonged disruptions through the Strait of Hormuz and the Red Sea.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 1 other outlet
- Crude oil price: Futures fall as Iran, Oman discuss maritime corridor in Strait of Hormuz thehindubusinessline.com
