U.S. oil drops to $80 on Strait of Hormuz prospects
Oil prices have declined sharply amid rising expectations of a partial return to navigation through the Strait of Hormuz, following talks between Iran and Oman regarding the phased and temporary management of vessel traffic. The futures contracts for U.S. crude dropped to around $80.37 per barrel, the lowest since August 10, while Brent crude fell approximately 2.6% to $86.28, after losses exceeded 3% at Tuesday’s close. These developments reduce the perceived risks to oil supplies from the Middle East, especially since about 20% of global shipments used to pass through the strait prior to the war. Technical negotiations between Iran and Oman are expected to continue for 30 to 60 days to establish permanent arrangements to ensure safe navigation and information exchange. However, vessel movement remains limited, with only five tankers passing through on Tuesday—below the usual average—while US oil inventories increased by about 4.2 million barrels, fueling concerns about an oversupply in the global market.
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