Oil fell for a third day as Iran and Oman discussed an “interim framework” aimed at resuming shipping through the Strait of Hormuz.
Brent traded near $86 a barrel, taking its decline this week to almost 9 per cent, while West Texas Intermediate was near $80. Iranian foreign minister Abbas Araghchi and his Omani counterpart Badr Albusaidi discussed the initiative to establish a “temporary joint maritime corridor,” according to a statement carried by the Oman News Agency.
Crude has fallen this week as diplomatic efforts gained traction and the threat of renewed military escalation faded, while Washington’s latest sanctions on Tehran stopped short of harsher measures on trading partners including China, the top buyer of the Opec member’s crude. Futures are still up more than 40 per cent this year as the US-Iran conflict that crimped supply from the energy-rich Persian Gulf approaches the six-month mark.
“It seems crude is now beginning to price in a sooner rather than later peace deal,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities Inc. “With some oil still getting through the strait, Iran and the US are more likely to be in a newer state of de-escalation as both sides are looking for an offramp.”
READ MORE
Technical talks between Iran and Oman will continue with the aim of agreeing on a permanent maritime corridor, the future administration of the strait, as well as a mechanism for information exchange, traffic management, and the provision of relevant maritime and security services, the Oman News Agency said.
The two sides will hold further talks to “negotiate a new permanent route within 30 to 60 days” for shipping through the vital waterway, the semi-official Tasnim news agency reported, citing Iranian deputy foreign minister Kazem Gharibabadi. He said they have agreed on a temporary route but didn’t specify when the next phase of talks over a permanent route will begin.
The US is preparing to return diplomats to Middle East embassies evacuated before and during the war, indicating Washington doesn’t anticipate a renewal of full-scale conflict, the New York Times reported. Meanwhile, Pakistan’s army chief concluded a one-day visit to Iran, with Iranian media saying the trip yielded valuable results.
Elsewhere, the American Petroleum Institute reported US crude inventories rose by 4.2 million barrels last week, according to a document seen by Bloomberg. If confirmed by official data later on Wednesday, that would mark a fourth weekly increase. - Bloomberg
