Oil Prices Plunge on Iran-Oman Talks
Oil prices fell by $2 on Wednesday as investors reacted to talks between Iran and Oman on reopening the Strait of Hormuz. The Strait, a critical route for global oil supplies, has been partially closed since the start of the war in Ukraine. Analysts said the talks have shifted market sentiment from expecting prolonged disruption to anticipating a partial reopening.
The Brent crude futures settled down 74 cents, or 0.84%, to $87.84 a barrel, while West Texas Intermediate crude futures settled down 13 cents, or 0.16%, at $82.23. The market reacted positively to the news that Iran and Oman are working on details of an agreement on the strait.
Ole Hansen, head of commodity strategy at Saxo Bank, said a credible agreement could remove another layer of geopolitical premium from oil prices. The Strait has been partially closed since February, with only five vessels transiting it on Tuesday, compared to the 10-day average of 15.