Oil Prices Hold Below $80 as Diplomats Make Progress on Strait of Hormuz

Oil prices held below $80 on Thursday as investors weighed diplomatic efforts to restore shipping through the Strait of Hormuz against persistent regional security risks. The Brent crude futures for October traded at $79.56 per barrel, up 0.14% from the previous close of $79.45, while US benchmark West Texas Intermediate (WTI) futures for September traded at $75.16 per barrel, down 0.08% from $75.22 in the previous session.

Iranian Deputy Foreign Minister Kazem Gharibabadi said Iran and Oman had reached an understanding on almost all issues related to future arrangements for the Strait of Hormuz and were close to finalising an agreement. However, he clarified that this understanding did not amount to a full reopening of the Strait of Hormuz.

Regional security risks remained in focus after Yemen's Houthi group claimed missile attacks on two Saudi oil tankers in the Red Sea and the Gulf of Aden. US President Donald Trump said he preferred reaching a deal with Iran over military action but warned that the use of force remained an option if diplomacy failed.

The development comes as commercial crude oil inventories unexpectedly rose by about 2.5 million barrels last week, defying expectations for a draw of around 1.5 million barrels, according to US Energy Information Administration (EIA) data.