Oil prices fell to a three-week low on Tuesday after senior US officials raised hopes of a deal with Iran to reopen the key Strait of Hormuz waterway. US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both said talks had progressed, raising the possibility that shipments could resume as soon as this week.
The cost of a barrel of Brent crude, the global benchmark for oil prices, fell by almost 5% to under $80 on the news that supply disruptions could be eased. But the failure of previous negotiations in recent months to de-escalate the conflict between the US and Iran has kept the oil market volatile, with drivers ultimately being hit by higher fuel prices at the pumps.
On Tuesday, along with the drop in Brent crude, US West Texas Intermediate prices were down more than 5%, to $76 a barrel. Both contracts dropped to their lowest levels since 13 July.
What did US officials say about the talks?
US Secretary of State Marco Rubio said there had been progress in discussions on getting more ships through the Strait with Iran and Oman.
"There's been progress made in those talks, but not finality yet. We're hoping that will happen very shortly,"
he told reporters at the State Department.
Bessent said a deal to reopen the Strait of Hormuz could be agreed as soon as Tuesday or Wednesday.
"There's a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict,"
he told CNBC.
"It would be freedom of movement,"
he added when asked whether Iran would be allowed to charge for ships passing through.
How much detail has been released?
While senior figures in the US government have announced that talks have been progressing, no details of what a potential deal may look like have been released. The Strait of Hormuz has been a central point in negotiations between the US and Iran, and before the conflict began in late February, the waterway handled about one-fifth of global daily oil and liquefied natural gas supplies.
Key Facts
- Oil prices fell to a three-week low on Tuesday.
- Brent crude fell by almost 5% to under $80 a barrel.
- US West Texas Intermediate prices fell more than 5% to $76 a barrel.
- Marco Rubio said talks had made progress, but were not final.
- Before the conflict began in late February, the Strait of Hormuz handled about one-fifth of global daily oil and liquefied natural gas supplies.
