Oil prices drop after claims of progress in US-Iran talks

Oil prices fell on Tuesday to a three-week low after comments by ‌Qatari and US officials raised hopes for a diplomatic resolution to the Iran war that could improve oil flows through the Strait of Hormuz. Brent crude futures fell $3. 30, or 3. 9%, to $80. 47 a barrel by 11: 19am ET (1519 GMT), and US West Texas Intermediate futures dropped $3. 67, or 4. 6%, to $76. 67 ​a barrel. Both contracts fell more than 5% to their lowest since July 13 earlier in the session. US Secretary ​of State Marco Rubio said on Tuesday there was progress in talks with Iran and Oman ⁠about moving more ships through the strait, but a final agreement was yet to be reached. Treasury Secretary Scott Bessent ​had said earlier on Tuesday that a deal with Iran to reopen the strait could come as soon as Tuesday or Wednesday. Qatar’s ​Foreign Ministry spokesperson Majed al-Ansari said efforts to secure a diplomatic resolution to the Iran war were continuing. The prospect of a diplomatic solution to the Middle East conflict has helped remove some of the geopolitical risk premium in oil prices after the US resumed bombing Iran last ​month, said Simon-Peter Massabni, head of business development at brokerage XS. com. “If negotiations between the United States and Iran make meaningful ​progress, the market could continue pricing in a lower probability of supply disruptions, further reducing the geopolitical risk premium embedded in crude prices, ” ‌Massabni said. Gulf Shipping traffic little changed Disruptions to shipping through the strait, through which a fifth of global oil and gas flowed before the war, have forced Middle Eastern nations to cut oil output sharply. The world has lost more than 2. 6 billion barrels of oil since the Iran war began in February, the head of Saudi oil company Aramco said. The oil market will, therefore, remain highly ​sensitive to political developments, Massabni ​said. Oil prices gained earlier in ⁠Tuesday’s session after a senior Iranian source told Reuters that Iran wants control over inbound shipping and visibility over outbound traffic through the strait, with the ability to intervene if necessary, as ​part of a plan being discussed with Oman to reopen the strategic waterway. “Gulf exports remain ​under pressure, with ⁠Strait of Hormuz transits only marginally improving from extremely depressed levels. The export disruption story is intact, with Iranian attacks on vessels constraining flows, ” ANZ analysts said. Shipping traffic at the key Gulf waterways of Bab el-Mandeb and the Strait of Hormuz held largely unchanged ⁠at the ​start of the week. Goldman Sachs expects Brent crude to trade in an $80-$90-a-barrel ​range until there is either confirmation of a new US-Iran agreement or a significant escalation in attacks and targets.

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