Oil Prices Slide Amid Optimism Over Hormuz Deal Progress
Oil prices dropped for the third day in a row on Wednesday as optimism grew that a deal could be reached to reopen the Strait of Hormuz, potentially freeing up Persian Gulf supplies.
Brent crude slid below $79 a barrel, while West Texas Intermediate (WTI) was near $75 after losing more than 10% in the prior two sessions. The decline comes as US President Donald Trump said he postponed new strikes on Iran to give talks more time.
Qatar stated that an interim proposal had been drafted, and both Washington and Tehran signalled progress in talks to reopen the waterway. Trump told reporters in Los Angeles that 'negotiations were good,' talks were 'moving along very nicely' and more would be known within 48 hours.
A proposed interim deal between the US, Iran, and Oman could see no tolls or fees paid, with inbound vessels using a northern lane, and outbound traffic a southern one. However, even if a short-term deal is reached, it might still fail to end the war conclusively or resolve Trump's concerns about the Islamic Republic's nuclear program.
'Now that passions have cooled somewhat, perhaps there is a chance a deal can be agreed to,' said Robert Yawger, director of the energy futures division at Mizuho Securities USA LLC. 'I still expect a bad deal to ultimately get done, which will allow the US to declare some kind of victory, but leave a lot of loose ends, including the nuclear deal.'