Oil Prices Decline on Optimism for Hormuz Deal Progress
Oil prices continued their decline on optimism that a deal to reopen the Strait of Hormuz could be reached, potentially freeing up Persian Gulf supplies. Brent crude for October settlement dropped 0.8% to $78.72 a barrel at 12:28 p.m. in Singapore.
US President Donald Trump expressed an optimistic tone about negotiations with Iran, stating that 'negotiations were good' and 'talks were moving along very nicely.' He added that more would be known within 48 hours.
A draft of an interim proposal has been prepared by Qatar, and both Washington and Tehran have signaled progress in talks to reopen the waterway. The US, Iran, and Oman are nearing a 60-day accord to resume commercial shipping through the Strait, with inbound vessels using a northern lane and outbound traffic using a southern one.
Robert Yawger, director of the energy futures division at Mizuho Securities USA LLC, said that 'now that passions have cooled somewhat, perhaps there is a chance a deal can be agreed to.' However, he also expects a bad deal to ultimately get done, which would allow the US to declare some kind of victory but leave many loose ends.