Hormuz Hopes Outrun Oil Flows as Prices Slide

Oil prices are declining as hopes for a deal to resolve tensions in the Strait of Hormuz seem to be running ahead of actual oil flows. The market has been pricing in a potential agreement, but the disruption to supply that drove prices up last week remains unresolved.

Oman has presented a plan backed by Gulf states that would allow Iran to collect voluntary fees for using the Strait under a joint regional arrangement. This comes as US President Trump said the United States is having 'good talks' with Iran.

The market is reacting to diplomatic headlines, but the barrels that were missing last week are still absent. Traffic through the Hormuz remains at a fraction of normal levels, and the Red Sea is still under attack. Saudi Aramco has shut its 400,000 barrel-per-day Jazan refinery after an attack.