Oil prices extended their decline on Wednesday as concerns over a wider military conflict in the Gulf eased, while traders assessed the prospects of an Iran-Oman agreement to secure safe passage through the Strait of Hormuz.
International benchmark Brent crude futures for October delivery fell 2.08% to $86.74 a barrel as of 2:41 a.m. ET, while US West Texas Intermediate futures for October declined 2.37% to $80.41 per barrel.
Brent was later quoted at $86.54 a barrel, down 2.30%, according to market data.
Analysts said the easing geopolitical tensions had reduced concerns about potential disruptions to oil supplies from the Gulf, contributing to the decline in crude prices.
“U.S. sanctions on Iran were less severe than anticipated,” said Dan Coatsworth, head of markets at AJ Bell, adding that lower oil prices helped markets regain some stability as government bond yields eased from recent highs.
Paolo Broccardo, chief executive officer of BankPro, said the reduced prospect of military action had lowered the perceived risk to Gulf oil supplies, although the United States had not ruled out further interventions.
Broccardo also pointed to reported progress in talks aimed at de-escalating tensions and restoring navigation through the Strait of Hormuz.
Meanwhile, Iran and Oman are discussing a joint temporary shipping route through the strategic waterway, alongside a proposed mine-clearing operation that could pave the way for a longer-term arrangement to administer the Strait.
Oman’s Foreign Minister said future management of the Strait and a permanent solution would be addressed in due course, with discussions involving regional partners aimed at promoting peace, stability, cooperation and freedom of navigation.
The Strait of Hormuz is a critical global oil transit route, making any disruption to shipping through the waterway a major concern for energy markets.
The prospect of an agreement between Iran and Oman has therefore helped ease some of the supply disruption fears that had contributed to recent volatility in oil prices.
Boluwatife Enome
Follow us on:
