Iran-Oman Deal on Hormuz Shipping Route Triggers Caution in Oil Market
Oil prices held steady on Thursday as market participants awaited news from Iran and Oman about restoring flows through the Strait of Hormuz. The Strait is a critical shipping route that handles one-fifth of global daily oil and liquefied natural gas supplies.
Iran's Foreign Ministry spokesperson Esmaeil Baghaei said that Tehran and Muscat have reached an understanding on geographic coordinates for the shipping route, but a joint announcement is being finalized pending certain third parties not interfering.
Traders remain cautious due to concerns about the deal's fragility. 'Until we see sustained, verifiable increases in volumes, the market will continue to price in a degree of supply risk,' said Tim Waterer, chief market analyst at KCM Trade.
The tensions in the region have been fueled by reports of attacks on Saudi tankers in the Red Sea and Gulf of Aden. Yemen's Iran-aligned Houthis claimed responsibility for launching missile attacks on two Saudi oil tankers, although there was no confirmation from Saudi Arabia.