Brent Crude Falls 2% as Hormuz Supply Fears Ease
Oil prices declined on Wednesday as concerns over supply disruptions in the Strait of Hormuz eased following Washington's shift from military strikes to economic pressure on Iran. The price of Brent crude futures for November delivery dropped 2% to $85.49 per barrel, while US benchmark West Texas Intermediate (WTI) crude futures for October delivery fell 0.6% to $80.45 per barrel.
The reduction in supply fears came as the United States signaled a shift toward economic and maritime pressure on Iran, with US Secretary of State Marco Rubio telling allied foreign ministers that Washington does not expect to launch new strikes against Iran 'for the time being.'
Rubio's comments were followed by news that Iran has agreed with Oman to establish a temporary transit route through the Strait of Hormuz, further easing market players' supply concerns. However, Iranian Deputy Foreign Minister Kazem Gharibabadi stressed that the temporary arrangement does not amount to reopening the strait.
Persistent US inflation concerns and expectations for another Federal Reserve (Fed) rate hike by year-end also weighed on oil prices. Data showing a rise in US crude inventories added to bearish sentiment, with the American Petroleum Institute (API) estimating that US commercial crude oil inventories rose by 4.2 million barrels last week.