Oil prices edged lower on Thursday as markets reacted to developments in Iran-Oman talks and assessed the possibility of a diplomatic breakthrough between the US and Iran that could end their five-month conflict and restore normal shipping activity through the Strait of Hormuz.
Brent crude futures fell 37 cents, or 0.5%, to $79.08 per barrel, while US West Texas Intermediate (WTI) crude declined 53 cents, or 0.7%, to $74.69 per barrel during early trade.
The decline came after reports suggested that negotiations between Iran and Oman were showing signs of progress.
Markets Watch Iran-Oman Talks, Strait Of Hormuz Developments
According to analysts, oil prices have moved back towards levels seen after the US and Iran reached an interim peace agreement on June 17. Investors are now closely monitoring whether ongoing discussions can result in a broader settlement.
A proposed arrangement involving Iran and Oman could allow Tehran to retain control over ships entering the Gulf through the strategically important Strait of Hormuz, according to sources cited by Reuters. The proposal would represent a major concession to Iran.
However, uncertainty remains as US officials have previously maintained that Washington would not accept Iranian control over a route that handles a significant share of global energy shipments.
President Donald Trump has indicated that a deal to reopen the strait could be reached soon.
Supply Risks Continue Amid Regional Tensions
Despite diplomatic efforts, concerns over possible disruptions remain. Iran has warned Gulf nations that any fresh US military action could lead to retaliation against critical energy infrastructure across the region.
Meanwhile, Yemen-based Houthi militants, aligned with Iran, claimed missile attacks on Saudi oil tankers near the Red Sea port city of Yanbu and in the Gulf of Aden. Saudi authorities have not confirmed the incidents.
Analysts said continued risks to Red Sea shipping were preventing markets from fully pricing in a quick end to Middle East supply disruptions.
While diplomatic progress could provide relief to oil markets, traders remain cautious as geopolitical risks and supply uncertainties continue to influence price movements.
