Oil Prices Extend Losses as Prospects Grow for Strait of Hormuz Interim Deal

Oil Benchmarks Weaken for Third Straight Session

As of 02:56 ET (06:56 GMT) on Wednesday, Brent Oil Futures expiring in October were down 0.5% at $79.00 per barrel, while West Texas Intermediate (WTI) crude futures for September fell 0.7% to $75.27 per barrel. Both benchmarks had already dropped more than 5% on Tuesday, extending sharp declines from Monday.

The continued weakness in prices came as market participants assessed the impact of potential progress toward securing maritime traffic through the Strait of Hormuz, a key transit corridor for global energy supplies.

Diplomatic Efforts Focus on Strait of Hormuz

The U.S., Iran, and Oman are reported to be nearing an interim agreement to reopen the Strait of Hormuz, with Washington aiming to announce a deal on Wednesday, according to Axios. Qatar stated on Tuesday that an interim proposal has been drafted as mediators work to narrow differences between Washington and Tehran.

However, Iranian media reports indicated that Tehran has said an agreement to reopen the waterway will be delayed as long as U.S. threats continue. Iran has also publicly denied that formal negotiations with Washington are taking place, underscoring the uncertainty around the diplomatic process.

The latest push follows comments from U.S. President Donald Trump that talks with Iran had begun and that Tehran had a “last chance” to reach an agreement. Qatar’s government said Trump discussed efforts to de-escalate tensions with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani in a phone call on Tuesday.

The proposal seeks to restore navigation through the Strait of Hormuz, which typically carries about one-fifth of global oil and liquefied natural gas shipments. Despite the diplomatic momentum, risks remain elevated, with another commercial vessel attacked near the strait on Tuesday, highlighting the fragile security environment.

U.S. Inventory Data Add to Downward Pressure

Industry data released late Tuesday also weighed on sentiment. The American Petroleum Institute (API) reported a build of 2.69 million barrels in U.S. crude oil inventories for the week ended July 31, compared with analysts’ expectations for a draw of about 2 million barrels.

Traders are now awaiting official figures from the U.S. Energy Information Administration (EIA), due later on Wednesday, to confirm whether the unexpected inventory increase is reflected in government data.

FAQ

What are current Brent and WTI prices?
As of 02:56 ET (06:56 GMT) on Wednesday, October Brent futures traded at $79.00 per barrel and September WTI futures at $75.27 per barrel.

Why are oil prices falling this week?
Prices are declining amid optimism that an interim agreement could be reached to restore shipping through the Strait of Hormuz, combined with industry data showing an unexpected build in U.S. crude inventories.

How important is the Strait of Hormuz for energy markets?
The Strait of Hormuz normally carries about one-fifth of global oil and liquefied natural gas shipments, making it a critical chokepoint for international energy trade.

What did the API report about U.S. crude stocks?
The American Petroleum Institute reported that U.S. crude oil inventories rose by 2.69 million barrels in the week ended July 31, against expectations for a draw of about 2 million barrels.