Oil Prices Slide as Iran-Oman Hormuz Shipping Route Advances
Brent and WTI crude fell to multi-week lows after reports that Iran and Oman agreed on coordinates for a temporary Hormuz shipping corridor, raising hopes for a broader US-Iran deal.
By Stratton Journal Research
Oil prices extended their weekly slide on Thursday, with Brent crude trading around $79.08 to $79.38 per barrel, down 33 to 37 cents, and West Texas Intermediate at $74.69 to $75.01, off 42 to 53 cents. Both benchmarks have tumbled roughly 11% over the first three sessions of the week, returning to levels last seen around the mid-June interim US-Iran agreement.
The trigger for the latest selling pressure came from Iran's Foreign Ministry spokesperson, who said Tehran and Oman have reached an understanding on geographic coordinates for a shipping route through the Strait of Hormuz. A joint announcement is being finalized, subject to no interference by third parties. According to Iranian and regional sources, the proposed arrangement would give Tehran control over ships entering the Gulf via Hormuz, described as one of the largest concessions discussed so far. The corridor could operate for two to four months, but it is not a full reopening.
That progress is fueling hopes of a broader US-Iran peace deal that could restore more normal traffic through the strait, which normally carries about 20% of global oil supply. Nomura Securities economist Yuki Takashima attributed the selling pressure to the Iran-Oman reports.
Markets are cautiously pricing in higher odds of a diplomatic breakthrough, but traders remain wary because no final US-Iran deal exists and significant disagreements persist, especially over Iranian control of the waterway. Washington has opposed giving Iran such control. Residual risks also include recent Houthi claims of attacks on a Saudi tanker in the Red Sea and broader supply concerns.
The market reaction mirrors the run-up to the mid-June interim agreement, when traders bet on a deal reopening or partially normalizing Hormuz. However, some analysts warn that the current market structure, with prompt contracts at a premium, still signals underlying tightness rather than an imminent glut. Prices and diplomatic details can shift rapidly with further headlines.
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