Oil prices extended their decline on Wednesday, falling over 2.5% as expectations of improved shipping through the Strait of Hormuz eased concerns about disruptions to global crude supplies. The fall followed a more than 3% drop in both major benchmarks during the previous session.
Brent crude futures fell $2.30, or 2.6%, to $86.28 a barrel, while US West Texas Intermediate (WTI) crude declined $2, or 2.5%, to $80.29.
The latest weakness came after Iran said it had resumed discussions with Oman on managing vessel movement through the strategically important waterway. The two countries have held intermittent talks in recent weeks as tensions surrounding the region have disrupted shipping.
The Strait of Hormuz is a crucial energy route, accounting for roughly one-fifth of global oil and liquefied natural gas shipments before the conflict began. Any restoration of normal traffic could therefore reduce pressure on international energy markets and lower the risk premium built into crude prices.
Markets weigh geopolitical risks
Oil prices fell despite the United States announcing additional secondary sanctions targeting Iran, indicating that expectations surrounding the Strait are currently exerting greater influence on market sentiment.
Iran and Pakistan have also discussed efforts to restore an interim ceasefire with the US. Pakistan’s interior minister said progress had been made towards reopening the waterway, adding to expectations that shipping disruptions could gradually ease.
US President Donald Trump has separately claimed that mines in the Strait have been cleared and warned Iran against placing new ones. The US military continues to monitor the strategic route.
However, the oil market remains vulnerable to renewed geopolitical shocks. Any fresh disruption to vessel movement could quickly push crude prices higher.
China has criticised the latest US sanctions against Iran and its trading partners as illegal, maintaining that the dispute should be resolved through dialogue while pledging to protect its interests.
