Iran is weighing a European demining mission in the Strait of Hormuz as talks with the US raise hopes of restoring normal shipping through the strategic waterway. According to a Bloomberg report, Iran is considering allowing European countries to remove naval mines from the Strait of Hormuz, a potential shift in its stance that could pave the way for restoring normal shipping through one of the world's busiest maritime routes. The proposal could provide the global shipping and insurance industries with much-needed independent assurance that the waterway is safe after more than five months of military conflict. However, any European demining mission would depend on several conditions, including Iran providing security guarantees for naval vessels involved and any ceasefire remaining in place long enough for the operation to proceed. The proposal would also require approval from Iran's powerful Islamic Revolutionary Guard Corps (IRGC), whose backing is seen as essential for any such mission to move forward.
Oil prices fell nearly 4% to below $77 per barrel after US Treasury Secretary Scott Bessent indicated that Washington and Tehran could strike a deal as early as Tuesday or Wednesday to restore "freedom of movement" through the Strait of Hormuz. Speaking to CNBC's Squawk Box, Bessent said talks between Washington and Tehran were making progress and that a deal could be finalised within days. "We are in talks with the Iranians. There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict," Bessent stated. Asked whether Iran would be allowed to charge fees from commercial vessels using the strategic waterway, Bessent said the arrangement would ensure free passage. "It would be freedom of movement. Even though things are still a little dicey there over the past few days, we saw quite a few ships coming out even now," he added. This development represents a significant shift from previous tensions that had driven oil prices to multi-year highs.
Goldman Sachs forecasts Brent crude prices between $80 and $90 per barrel, expecting this range to persist until clarity emerges on US-Iran nuclear talks. According to a Reuters report, the investment bank estimated the fair value of spot Brent crude at around $80 per barrel, indicating that oil markets are currently pricing in only a modest geopolitical risk premium despite persistent uncertainty over Middle East oil supplies. Brent crude traded near $85 per barrel on Tuesday as mixed signals from the United States and Iran regarding negotiations to end their five-month-old conflict continued to cloud the market outlook. As per Goldman Sachs, although Brent prices eased into the low-to-mid $80 range after the United States delayed planned strikes on Iran and reports pointed to progress in talks over managing shipping through the Strait of Hormuz, physical oil market conditions have continued to tighten.
Crude oil prices rebounded 1.38% to $84.93 per barrel for October Brent futures and 0.98% to $81.13 per barrel for September WTI futures as uncertainty over proposed US-Iran talks persisted. The latest surge brings Brent crude to $86.15 per barrel and WTI to nearly $82 per barrel, up 2%, as Iran's denial of negotiations and Trump's escalating warnings have intensified market concerns. According to latest reports from The Hindu BusinessLine, the recovery came after US President Donald Trump issued a post on Truth Social stating that Iranian leadership was "unbelievably duplicitous" and denied ongoing negotiations. However, Iran's Foreign Ministry spokesman Esmail Baghaei rejected Trump's claim on Monday, stating no negotiations with the US were taking place and no meetings were scheduled. The Strait of Hormuz continues to remain a major sticking point, with the US maintaining that the memorandum of understanding agreed in June required Iran to open the waterway, while Tehran argues the text explicitly preserved its authority.
Global oil markets are experiencing unprecedented tightening due to multiple supply disruptions across key regions. According to Goldman Sachs, global visible oil inventories declined by 6.3 million barrels per day over the past two weeks, driven by lower oil flows from the Gulf and Red Sea, reduced Russian exports and stronger crude imports across Asia. Gulf oil exports have fallen to around 36% of their pre-war levels on a seven-day moving average basis, compared with nearly 80% in early July. The bank estimated that loaded tanker capacity in the Red Sea has declined by 22% since Iran-aligned Houthi forces announced a blockade, adding to concerns over regional supply disruptions. Saudi Arabia's oil exports are estimated to be down by about 2.4 million barrels per day compared with a year ago, though an increasing share of shipments has been rerouted through Egypt's SUMED pipeline to help partially offset disruptions to Red Sea shipping routes. Goldman Sachs also noted that Russian crude and condensate exports dropped by 1.3 million barrels per day over the past two weeks, with recurring disruptions at the CPC terminal in the Black Sea keeping shipments well below normal levels.
Crude oil prices corrected by 10% during the week but remain up 15% for July, marking the strongest monthly gain since April. According to reports from Business Standard, the weekly pullback reflected a partial easing of geopolitical risk after reports that Pakistan's Foreign Ministry was seeking to restore peace and stability through negotiations between the US and Iran. Shipping activity through the Strait of Hormuz has also improved in recent days, with crude oil and refined product net exports through the strait averaging 4.2 million barrels per day in the week ended July 31, compared with 3.2 million bpd the previous week, as reported by Barclays. Latest analysis from Standard Chartered suggests oil prices will remain largely rangebound within USD 70-90/bbl, with any short-lived moves above this range likely to incentivise conflict de-escalation to avoid a bigger inflation shock.
Technical analysis reveals conflicting signals for crude oil prices across major markets. October Brent crude futures opened with a gap-down and slipped further before finding stability at $84.93/barrel, while domestic crude oil futures (Aug) hit a low of ₹7,464 on Tuesday before recovering to ₹7,750. According to The Hindu BusinessLine, Brent crude remains above a key support at $84.75, where both 21- and 50-day moving averages coincide, suggesting potential recovery to $97 in the near term with a breakout potentially reaching $100. However, a decline below $84.75 could trigger a drop to $75. Similarly, domestic crude oil futures remain above the base at ₹8,000 and support at ₹7,500, indicating potential rally to ₹9,000, though a breach of ₹7,500 support could lead to a fall to ₹7,000 and subsequently to ₹6,500.
China's June crude oil imports disappointed the market, falling 41% to a near-decade low of 29.27 million tons, or 7.2 mbpd. According to Business Standard, the recent blockade around Hormuz and the conflict zone in the Red Sea have kept roughly 7–8 mbpd of oil offline from global supplies. Supply from Russia's CPC terminal was also suspended again following reports of drone attacks on two oil tankers near the terminal, adding another layer of disruption to an already fragile global supply picture. Standard Chartered analysis shows that Hormuz disruption has lifted oil's risk premium, with the firm raising their three-month WTI crude oil price forecast, though they maintain that the recent geopolitical easing has provided some relief to global supply concerns. Apart from US-Iran conflict, traders are focusing on Russian and Kazakh crude supplies, with attacks on energy infrastructure around the Black Sea and Russia's oil export network witnessed throughout July.
US energy producers and refiners remain key beneficiaries of the West Asian crisis, with refiners operating at 97% utilization, helping lift US crude and product exports to 11 million barrels last week. As reported by Business Standard, US crude inventories as of July 24 were 6.4% below the seasonal five-year average, while gasoline inventories were 6.6% below and distillate inventories were 8.5% below the seasonal five-year average. The Strategic Petroleum Reserve reserves stood at 307 million barrels, the lowest level since 1983. Standard Chartered notes that low US inventories limit the supply, with the firm expecting the Fed to hold its policy rate for the rest of the year as energy-driven inflation gradually fades and the job market remains in balance.
