Crude oil prices extended their decline for a fourth consecutive session, with Brent crude falling 0.3% to $89.66 a barrel and West Texas Intermediate declining 0.38% to $83.21, according to latest market reports. The latest decline follows fresh hopes that the Strait of Hormuz could reopen after Iran said it had resumed talks with neighbouring Oman on managing the strategic waterway. Despite the recent pullback, crude remains more than 40% higher this year as the US-Iran conflict continues to disrupt energy flows from the Persian Gulf. The conflicting signals have left oil markets caught between the prospect of more Middle Eastern supply returning to global markets and fresh disruptions to Russian exports from the Russia-Ukraine conflict. Both benchmarks were poised to end the week lower, with Brent down 5.1% and WTI falling 4.5% for the week, marking an end to a two-week winning streak in crude futures. As per Reuters, a combination of US tactics moving to economic sanctions rather than military pressure and talks of Oman-Iran's joint corridor have led to risk premiums declining.
Iran and Oman have agreed to work on a framework to restore safe navigation through the Strait of Hormuz, including a temporary joint navigation corridor and a project to clear mines from the strategic waterway, according to a joint statement following Oman's Foreign Minister Badr bin Hamad Al Busaidi's visit to Tehran. Iranian Foreign Minister Abbas Araghchi and Omani Foreign Minister Badr Albusaidi discussed an "interim framework" aimed at establishing a temporary joint maritime corridor through the waterway. Iran's Revolutionary Guards said Wednesday that negotiations with Oman had produced an understanding on sharing revenues from fees imposed on ships using the strait, an arrangement opposed by Washington. The proposed framework would preserve the sovereignty and sovereign rights of coastal states while allowing technical negotiations to continue on a permanent navigation corridor and the future administration of the strait. This diplomatic progress represents a significant step forward in efforts to restore normal shipping operations through the critical waterway, which has been a major concern for oil markets throughout the ongoing US-Iran tensions. The two sides also proposed mechanisms for sharing information, managing maritime traffic and providing navigation and security services, with both countries wanting to hold discussions with other Gulf states and stressing the need to comply with international law.
The Trump administration has repeatedly told mediators it has no interest in reviving the June memorandum of understanding with Iran, according to a Wall Street Journal report citing people familiar with the matter. Earlier on Thursday, Washington said it was not in talks with Iran despite diplomatic efforts by other countries to re-engage the two sides, as reported by The Economic Times. On Monday, the U.S. announced what it called the "toughest sanctions in history" on Iran, with Tehran responding that the sanctions were an "inhumane and hostile act" that had lost their effectiveness. Iranian official Gharibabadi warned Washington late Tuesday that the strait would not be reopened until the United States fulfilled commitments it had breached, stating "The Strait of Hormuz will only be reopened in exchange for an end to the war on all fronts, the lifting of the blockade and a resolution to the situation in Yemen." This development complicates the diplomatic efforts by Iran and Oman to establish a temporary maritime corridor through the waterway, as the US maintains its hardline stance on Iranian negotiations.
Ship traffic through the Strait of Hormuz remains uneven despite some recovery, with seven commodity vessels transiting the waterway on Thursday, down from 17 a day earlier and below the 10-day average of 15, according to preliminary shipping data reported by Reuters. At the Bab el-Mandeb, another major maritime chokepoint, 17 commodity vessels passed through, with six entering and 11 exiting. Goldman Sachs estimated that total Gulf exports recently stood at 15 million to 16 million barrels per day, around 7 million to 8 million bpd below pre-war levels but 5 million to 6 million bpd above the lowest point recorded in March. Most returning ships are using a Washington-backed corridor that Tehran cannot levy tolls on, though this arrangement has precedent from the 1987 US reflagging of Kuwaiti tankers. The $20 million shipping cost barrier for refined products through Hormuz creates additional supply constraints that could sustain the current market split between crude and products. Satellite imagery meanwhile indicates that Saudi Arabia may be increasing oil loadings from within the Persian Gulf, suggesting the world's largest crude exporter is adapting its export routes amid threats from Yemen's Houthi militants against shipments through the Red Sea. US President Donald Trump claimed that 10 million barrels of oil had exited Hormuz Tuesday, bolstering hopes that shipments through the critical waterway could be increasing after months of disruption.
In India, crude oil futures also traded lower on Friday, with crude futures for September delivery on the Multi Commodity Exchange (MCX) falling ₹49, or nearly 1%, to ₹7,915 per barrel, according to PTI reports. The October contract declined ₹56, or 0.71%, to ₹7,797 per barrel. Analysts cited by news agency PTI said that reports of a possible US role in Venezuela's oil industry weighed on prices as traders assessed the possibility of increased output from the South American producer. Anindya Banerjee, head of commodity and currency research at Kotak Securities, said Brent was trading lower as Washington's shift from military to economic pressure had reduced fears of a wider war. He added that Iran and Oman had reached a partial arrangement on sharing revenue from Hormuz traffic, although Tehran has said a full deal remains blocked. "The easing in prices reflects a market moving away from extreme conditions, although the underlying supply remains tight," Banerjee noted.
