Global oil prices dropped by more than five percent on Tuesday after senior United States officials indicated that negotiations to reopen the strategically important Strait of Hormuz were making progress, raising hopes of easing disruptions to global energy supplies.
Brent crude, the international benchmark for oil prices, fell to below $80 per barrel, its lowest level in three weeks, while US West Texas Intermediate (WTI) crude also declined by more than five percent to around $76 per barrel.
The sharp decline followed comments by US Secretary of State Marco Rubio, who said discussions involving Iran and Oman had advanced, although no final agreement had been reached.
“There has been progress made in those talks, but not finality yet. We’re hoping that will happen very shortly,” Rubio told reporters.
US Treasury Secretary Scott Bessent also expressed optimism, saying an agreement to restore commercial shipping through the Strait of Hormuz could be reached as early as Tuesday or Wednesday.
He described the objective as restoring “freedom of movement” for vessels navigating one of the world’s most critical oil transit routes.
Despite the optimism from Washington, Iran has denied holding direct negotiations with the United States. Iranian officials insist discussions are taking place through Oman, which continues to act as a mediator.
Qatar has also confirmed it remains engaged in diplomatic efforts but said no direct US-Iran talks are currently scheduled.
The Strait of Hormuz, through which roughly one-fifth of the world’s daily oil and liquefied natural gas supplies pass, has been heavily disrupted since conflict between the US and Iran escalated earlier this year.
Iran has largely halted commercial traffic through the waterway, while the US has maintained a naval blockade of Iranian ports.
Security concerns have also spread to the Red Sea, where attacks linked to Yemen’s Iran-backed Houthi rebels have made alternative shipping routes increasingly dangerous.
On Tuesday, an Indian-flagged vessel was reportedly sunk near Yemeni waters, although all 14 crew members were rescued.
The ongoing tensions have fuelled sharp swings in global oil prices, with crude previously climbing above $120 per barrel during periods of heightened conflict before retreating on renewed diplomatic hopes.
Market analyst Danni Hewson of AJ Bell cautioned that investors remain wary, noting that previous attempts to secure a lasting agreement have repeatedly broken down.
The recent surge in oil prices has pushed fuel costs higher across many countries, with petrol prices rising in both the United Kingdom and the United States. Higher crude prices have also boosted profits for major oil companies, including BP, Shell, Chevron and Exxon Mobil.
Meanwhile, US stock markets traded higher following news of the potential breakthrough, as investors welcomed easing energy prices alongside positive corporate earnings linked to artificial intelligence.
Although markets reacted positively, uncertainty remains over whether negotiations will ultimately result in a lasting agreement capable of restoring normal shipping through the Strait of Hormuz.
SOURCE: BBC