Iran offers to reopen Hormuz strait within 7 days in push for diplomacy

Oil prices dipped 1% on Tuesday following reports Iran might reopen the Strait of Hormuz within a week if the US softened its military stance, alleviating worries about potential disruptions to vital global oil routes. Brent crude futures for November slipped 89 cents, or 0.89%, to $99.45 a barrel, while WTI October futures fell $1.09, or 1.14%, to $94.69 a barrel. The more actively traded November contract declined $1.31, or 1.42%, to $91.06 a barrel.

Iran's willingness to reopen the strategic waterway, as per a senior Iranian official's statement to Kyodo News, comes as Iran intensifies efforts to restart talks with Washington. Amid Tehran's endeavors to rekindle negotiations with the US, market analysts expressed optimism that diplomatic progress could be underway.

Capital Economics senior climate and commodities economist Hamad Hussain noted that a possible reopening of the strait could signal positive developments in diplomatic efforts. However, Hussain cautioned that additional hurdles, such as tolls and fees, could impede a long-term resolution.

The market's attention is also centered on US President Donald Trump's upcoming meetings with world leaders at the UN General Assembly, a forum set against the backdrop of an unstable Middle East and a protracted conflict in Ukraine. Tehran and Washington exchanged threats on Sunday, but Trump indicated openness to meeting Iranian President Masoud Pezeshkian, who is expected to attend the UN event this week.

Meanwhile, Saudi Aramco has resumed oil exports through the Strait of Hormuz following attacks on its East-West Pipeline, which forced a temporary halt to some shipments via Yanbu. Approximately 14 million barrels of Saudi crude oil were loaded onto seven supertankers in the Gulf on Sunday, tanker tracking data revealed.

Iran's security chief, Mohsen Rezaei, conveyed Tehran's conditions for re-engaging in negotiations to mediators, as reported by Al Jazeera. Meanwhile, Saudi Aramco's oil production at the Sharara oilfield in Libya has plummeted by around 200,000 barrels per day, plummeting to 100,000-105,000 barrels per day.