Iran-Oman Deal on Strait Bypass Weighs Heavily on Oil Prices
Oil prices continued their decline as Iran and Oman edged closer to an agreement on a shipping route that bypasses the Strait of Hormuz. The potential partial resumption in crude shipments through the strait is weighing on oil prices, which have already fallen by about 11% over the first three trading days this week.
The West Texas Intermediate (WTI) traded around $75 a barrel, while Brent had settled above $79 a barrel the previous day. Iran's government said it had reached a preliminary agreement with Oman on a new shipping route that would operate for two to four months and involve passage through the Strait of Hormuz.
The plan does not amount to a full reopening of the strait, according to Iran. President Donald Trump stated that the US is in talks with Iran and will see how the negotiations turn out.
Rob Thummel, senior portfolio manager at Tortoise Capital, predicted that global oil prices could fall to about $70 a barrel if an agreement with Iran is reached.