Brent, WTI Fall as Markets Assess Iran-Oman Strait of Hormuz Talks

By Adedapo Adesanya

Major crude oil grades settled ​lower on Wednesday, as investors monitored talks between Iran and Oman on the Strait of Hormuz ‌and a smaller-than-expected rise in US crude stockpiles.

Brent crude futures lost 74 cents or 0.84 per cent to $87.84 a barrel, while West Texas Intermediate crude futures declined by 13 cents or 0.16 per cent to $82.23 per barrel.

It was reported that Iran and Oman are working on the details of the agreement on the strait after Iran’s Revolutionary Guards said the two countries had agreed how to share the waterway and ​its revenues.

In a joint statement, Oman and Iran said they held consultations which “focused on the importance both countries attach to the resumption of safe navigation through the Strait of Hormuz while preserving their sovereignty and sovereign rights.”

The foreign affairs ministers of the two countries discussed a proposed framework that “includes the establishment of a joint temporary navigational corridor through the Strait of Hormuz and an agreement to implement a joint project to clear the Strait of mines,” Oman and Iran said.

Despite the talks with Oman on a temporary and tentative Hormuz reopening, Iran warned early on Wednesday that the Strait of Hormuz would remain closed unless the US ends the war.

Market analysts noted that a credible agreement that rapidly restores Hormuz traffic could remove another layer of geopolitical premium.

Other efforts to reach a broader settlement to the Iran conflict are also continuing. The Pakistan government said it made “significant progress” in talks earlier this week, while the Prime Minister of Qatar, ​Sheikh Mohammed bin Abdulrahman al-Thani, will visit ​Tehran to meet Iranian officials ⁠to discuss ways to de-escalate tensions on Thursday.

Crude oil inventories in the US saw an increase of 100,000 barrels during the week ending August 21, according to new data from the US Energy Information Administration (EIA) released on Wednesday. The increase brings commercial stockpiles to 428.9 million barrels, in the world’s largest oil producer.

The EIA’s data release follows figures by the American Petroleum Institute (API) that were released a day earlier, which reported that crude oil inventories had risen by 4.2 million barrels in the period.

In Russia, its fourth-largest oil refinery and ​second-largest petrol producer, NORSI, suspended crude oil processing on Wednesday after a Ukrainian drone attack. It was also reported that Russia is ⁠considering stepping up ballistic missile strikes on Ukraine, including targets in the city centre, and on infrastructure after concluding that efforts to negotiate a peace deal have reached a dead end.

A US senator sponsoring a ⁠bill for ​wide-ranging sanctions on Russia said on Wednesday he was hopeful it would pass the House ​of Representatives next month. This is part of efforts to disrupt President Vladimir Putin’s efforts to fund his war in Ukraine.