Oil extends losses as Iran-Oman talks revive hopes for Hormuz reopening

Oil prices continued to decline on Wednesday as renewed discussions between Iran and Oman raised hopes that shipping through the Strait of Hormuz could gradually resume, easing concerns over potential disruptions to Middle Eastern energy supplies.

At the time of writing, October Brent crude was down $1.97 at $86.61/bbl, while October WTI had also fallen $1.97 to $80.39/bbl. Both benchmarks had already posted significant losses on Tuesday, with October Brent settling $3.59 lower at $88.58/bbl and October WTI dropping $2.65 to $82.36/bbl.

The latest weakness followed talks between Iran and Oman on establishing a “joint temporary navigational corridor” through the Strait of Hormuz and removing mines from the waterway. The discussions renewed expectations that restrictions on vessel movements through the critical energy route could gradually ease.

However, traffic through Hormuz remains far below normal. Preliminary Kpler data showed only five commodity vessels passed through the strait on Tuesday, comprising two LPG tankers, one bitumen tanker and two empty product tankers. This was below the 10-day average of 15 vessels and significantly below pre-war levels. Before the US-Israeli war with Iran began in February, the strait carried around one-fifth of global oil and LNG shipments.

Crude prices also faced pressure from indications of rising US inventories. The American Petroleum Institute reportedly estimated that US crude stocks increased by about 4.2 million barrels in the week ended August 21, well above market expectations for a rise of roughly 600,000 barrels. Official inventory figures from the EIA were due later on Wednesday.

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