Key facts
- US oil prices declined as Iran and Oman resumed talks on managing the Strait of Hormuz.
- The Strait of Hormuz, a vital chokepoint, previously handled one-fifth of global oil and LNG shipments.
- US West Texas Intermediate crude futures fell 1.7% to $80.99.
- Iran's crude exports in August averaged approximately 0.3 million barrels per day.
- The US announced expanded sanctions on Iran on Monday.
- UK Finance Minister John Healey expressed support for US diplomatic efforts and called on Iran to cease destabilizing activity.
US oil prices declined as Iran and Oman resumed talks regarding the Strait of Hormuz, raising hopes for its reopening. This development comes amid intensified US sanctions pressure on Iran and a significant drop in its crude exports.
US West Texas Intermediate crude futures fell 1.7% to $80.99, extending losses from the previous session. The contract had previously settled at its lowest since August 13. Iran announced it had restarted discussions with its neighbor Oman concerning the management of the strategic waterway.
Iran and Oman have been engaged in intermittent negotiations for weeks regarding traffic control through the Strait of Hormuz, which previously handled one-fifth of global oil and liquefied natural gas shipments before the conflict began in February. The US on Monday introduced expanded sanctions aimed at cutting off Iran's economic lifeline, threatening penalties for countries continuing to conduct business with Iran, though immediate penalties were not specified.
Earlier in the week, oil prices had stabilized as investors assessed new US sanctions on Iran, with Brent futures at $92.16 and WTI at $85.02. However, prices had previously dropped to a one-week low, with traders considering economic pressure on Iran less risky than military action. Stalled US-Iran talks and attacks on ships in the Strait of Hormuz had also pushed oil prices toward $100 per barrel. Iran's crude exports in August averaged approximately 0.3 million barrels per day, and China's options for importing Iranian oil have been diminishing.
British Finance Minister John Healey stated on Tuesday that the UK supports US efforts to secure a diplomatic solution on Iran and welcomed steps to increase pressure after the US announced expanded sanctions on Iran on Monday. Healey also called on Iran to cease its “de-stabilising activity” across the region, including in the Strait of Hormuz.