Iran-Oman Deal Sparks Crude Oil Price Decline on Strait of Hormuz Concerns

Crude oil futures declined on Thursday morning following reports that Iran and Oman would sign an agreement to partially reopen the Strait of Hormuz. The development sparked concerns about disrupted energy flows, with markets awaiting a deal between the US and Iran.

The October Brent oil futures contract fell by 0.30% to $79.21 per barrel, while September WTI crude oil futures dropped by 0.39% to $74.93 per barrel. August crude oil futures on the Multi Commodity Exchange (MCX) rose by 0.52% to ₹7146 against the previous close of ₹7109.

According to Warren Patterson, Head of Commodities Strategy at ING Think, and Ewa Manthey, Commodities Strategist, ICE Brent continues to trade below $80 a barrel as markets pin their hopes on a US-Iran deal. The duo noted that Iran has insisted the agreement proceed without interference from unnamed third parties, likely referring to the US.

The weekly petroleum status report by the US Energy Information Administration (EIA) for the week ending July 31 revealed that US commercial crude oil inventories increased by 2.5 million barrels from the previous week. Total motor gasoline inventories decreased by 1.6 million barrels last week and were 7% below the five-year average.