US President Donald Trump said in a Fox News interview that the Strait of Hormuz would open 'very soon' or Iran would be 'hit very hard', as oil prices fell to a three-week low amid hopes of a deal. He insisted that Iran was keen to seal an agreement to end months of conflict.
Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both claimed that talks had progressed, potentially allowing shipments to resume later this week. Bessent told CNBC that a deal could be agreed as soon as Tuesday or Wednesday, adding that it would ensure 'freedom of movement' through the strait.
On Tuesday, Brent crude fell nearly 5% to below $80 a barrel, and continued to decline on Wednesday, down about 0.7% in Asian trading. US West Texas Intermediate also dropped more than 5% to $76. Both contracts hit their lowest levels since July 13.
However, the failure of previous talks to de-escalate the conflict has left the oil market volatile. Analysts remain skeptical. Danni Hewson, head of financial analysis at AJ Bell, noted that investors are acutely aware of how many times the situation has reached this point and how fragile lasting agreements can be.
Iran has denied negotiating directly with the US, saying it is only talking to Oman, a mediator. A spokesman for Iran's foreign ministry described the talks with Oman as positive. Qatar, another mediator, said it was continuing efforts but admitted no direct talks are currently planned.
The US has reportedly used nearly all of its global stockpile of long-range precision missiles, according to sources cited by CBS News. The Strait of Hormuz, which handled about one-fifth of global daily oil and LNG supplies before the conflict, remains a key chokepoint.
Iran has halted most traffic through the strait, while the US has imposed a naval blockade on Iranian ports. Yemen's Houthis have also blockaded Saudi ports in the Red Sea since July 20, making that alternative route increasingly dangerous, with a spate of attacks on vessels reported.
The disruption has pushed fuel prices up worldwide. In the UK, average petrol prices hit £1.60 per litre, while US gasoline averages above $4 a gallon, according to AAA. Major oil companies like BP, Shell, Chevron, and Exxon Mobil have reported bumper profits, but Hewson said they are 'at the mercy' of Trump's 'machinations'.
On Monday, Trump warned Iran faced its 'last chance' to agree a deal, claiming he had called off 'massive' strikes for talks to resume. US stock markets traded higher on Tuesday, buoyed by lower oil prices and strong corporate results related to artificial intelligence.
Source: www.bbc.co.uk