Key facts
- Oil prices fell as progress in Iran-Oman talks fueled hopes for a U.S.-Iran peace deal.
- Brent crude futures were down 0.5% and WTI futures down 0.7%.
- A proposed deal could grant Iran control over ships in the Strait of Hormuz.
- Houthi attacks on Saudi oil tankers and rising U.S. crude inventories also influenced prices.
- U.S. crude inventories increased by 2.5 million barrels.
Oil prices experienced a decline on Thursday as diplomatic efforts between Iran and Oman raised expectations for a potential peace deal between the U.S. and Iran. Such an agreement could lead to the reopening of the Strait of Hormuz, a critical chokepoint for global energy supplies.
Brent crude futures saw a decrease of 37 cents, or 0.5%, settling at $79.08 a barrel, while U.S. West Texas Intermediate (WTI) futures fell by 53 cents, or 0.7%, to $74.69 a barrel. This dip followed reports of progress in the Iran-Oman talks, with some investors viewing the current price levels as a return to those seen after an interim U.S.-Iran agreement in June.
A key aspect of the proposed deal involves Iran gaining control over ships transiting the Strait of Hormuz, a significant concession according to sources. However, U.S. officials have consistently stated they would not agree to Iran controlling this vital energy route. Iran has also issued warnings of retaliation against regional energy infrastructure in response to any further U.S. attacks.
Adding to market uncertainty, Yemen's Iran-aligned Houthis claimed responsibility for missile attacks on Saudi oil tankers. These actions, along with rising U.S. crude inventories, tempered optimism about potential disruptions easing. Data from the Energy Information Administration showed that U.S. crude stocks increased by 2.5 million barrels in the week ending July 31, contrary to analyst expectations of a draw.