Iran-Oman Progress Sends Oil Prices Lower Amid US-Iran Peace Deal Uncertainty
Oil prices declined on Thursday due to progress in Iran-Oman talks, with investors waiting for signs of a US-Iran peace deal. Brent crude futures fell by 33 cents or 0.42 percent to $79.12 a barrel, while US West Texas Intermediate futures dropped by 42 cents or 0.56 percent to $74.80 a barrel.
Iran and Oman have reached an understanding on the geographic coordinates for a shipping route through the Strait of Hormuz, with a joint announcement being finalized pending certain conditions. This progress has led to some selling pressure in the market, according to Yuki Takashima, economist at Nomura Securities.
Takashi noted that prices have returned to levels seen when the US and Iran signed an interim peace agreement on June 17, with investors closely watching whether the two sides can reach a final deal. The proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, one of the biggest concessions yet to Iran.
US officials have repeatedly stated they would never agree to Iran controlling access to the Strait of Hormuz, which is a critical trade route for energy supplies. The US-Iran conflict has disrupted energy flows in the region, with Gulf countries' crude oil and condensate exports remaining about 40 percent below pre-war levels.