US-Iran Diplomacy Boosts Oil Prices as Strait of Hormuz Reopening Looms

Oil prices plummeted on Tuesday as diplomatic efforts between the United States and Iran gathered momentum, easing concerns over prolonged supply disruptions in the Middle East.

The global oil benchmark, Brent, dropped below $84 per barrel after trading above $100 last week, while the US benchmark, West Texas Intermediate, fell to about $79 per barrel, according to data from Oilprice.com.

The decline came as renewed peace talks between Washington and Tehran reduced fears of a major supply shock in the global energy market. The Strait of Hormuz, a critical global oil shipping route through which about a fifth of the world’s crude passes, was reopened last month after being closed following US strikes on Iran.

However, it was reclosed recently as the two countries exchanged strikes. But fresh developments signalled possible progress towards reopening the waterway, with Iran proposing a temporary arrangement to allow one direction of maritime traffic through Iranian waters.