Oil Prices Plummet on Hopes for Strait of Hormuz Reopening

Oil prices dropped by about 2% on Wednesday, following yesterday's losses, as hopes rose that the Strait of Hormuz could reopen after Iran and Oman resumed talks to manage the waterway.

The Brent crude futures fell $1.78 or 2.0% to $86.80 a barrel, while US West Texas Intermediate crude futures were down $1.49 or 1.8% at $80.87.

Mitsuru Muraishi, an analyst at Fujitomi Securities, said that the market is reacting to developments surrounding navigation through the Strait of Hormuz and hopes for progress in talks between Iran and Oman have triggered selling.

However, uncertainty over the outlook has prompted bargain buying, limiting further losses. Prices are likely to remain range-bound for the time being, Muraishi added.