Oil prices slide 2% as hopes grow for Strait of Hormuz reopening
Oil prices fell around 2% on Wednesday as hopes of a possible reopening of the Strait of Hormuz eased concerns over supply disruptions.
Brent crude dropped $1.78, or 2%, to $86.80 a barrel, while U.S. West Texas Intermediate (WTI) fell $1.49, or 1.8%, to $80.87 by 0027 GMT. Both benchmarks had declined by more than 3% on Tuesday.
The latest losses followed news that Iran had resumed discussions with Oman on managing traffic through the Strait of Hormuz, a key global energy route that handled about one-fifth of the world’s oil and liquefied natural gas shipments before the war began in February.
Iran and Oman said they had discussed establishing a temporary navigation corridor and agreed to remove mines from the waterway.
Analyst Mitsuru Muraishi of Fujitomi Securities said hopes of progress in the talks had prompted investors to sell, although uncertainty over the situation was supporting some bargain buying and limiting the decline.
Meanwhile, the United States has begun returning personnel to some diplomatic missions in the Middle East that were evacuated or scaled back during tensions with Iran, signalling that Washington may see a reduced risk of further escalation in the short term.
The development comes after the U.S. expanded sanctions on Monday targeting Iran’s economy, while warning countries doing business with Tehran that they could face penalties.
Tensions remain, however. The United Kingdom Maritime Trade Operations said an oil tanker was hit by an unidentified projectile and disabled near Oman’s Ash Shishah, close to the entrance of the Strait of Hormuz.
In the United States, industry data showed crude inventories increased by about 4.2 million barrels in the week ending August 21, far above analysts’ average forecast of a 600,000-barrel rise. Official inventory figures from the U.S. Energy Information Administration were expected later on Wednesday.
Source: Reuters
About The Author
