Oil prices fall as US-Iran negotiations resume on Hormuz Strait

Oil prices declined amid renewed diplomatic efforts between the United States and Iran to reopen the Strait of Hormuz. Brent crude fell to $102.16–$105.82 per barrel with losses between 0.73% and 0.9%, while West Texas Intermediate dropped to $91.39–$93.09, declining 0.8% to 1.61%. The price movement reflects cautious market sentiment as both sides explored a phased agreement during the UN General Assembly.

Iran's foreign minister submitted a seven-day proposal for reopening the Strait, contingent on US fulfillment of specific conditions: lifting the naval blockade on Iranian ports, ending sanctions, and unfreezing Iranian assets. A US White House official said President Trump remained open to negotiations but emphasized that existing sanctions and port blockades placed the US in a favorable negotiating position. At the UN, Trump stated peace talks were "very productive" while also threatening Iran with "annihilation," creating mixed signals. Iran's President Masoud Pezeshkian responded by rejecting pressure, stating that Iran would negotiate but would not "bow to pressure."

Analysts attributed the price decline partly to improved supply prospects: Saudi Arabia restarted its East-West pipeline and higher oil flows through the Strait offset geopolitical risk premiums. However, significant obstacles remained. Iran's security chief Mohsen Rezaei reiterated that the Strait would not reopen unless Iran's conditions were met. US Secretary of State Marco Rubio stated a deal would require sustained effort and emphasized that military options remained available.

Market watchers cautioned that lasting progress was uncertain. Karobaar Capital's chief investment officer warned that without substantive developments, Brent crude would likely remain in the $100–$110 range, with potential rebound to $120 if export or supply chains faced fresh disruptions. Analysts noted that oil benchmarks had posted six consecutive daily losses before reversing with a 4% gain on Wednesday, reflecting volatility tied to diplomatic announcements. Crude inventories added complexity: US crude oil stocks rose 3 million barrels to 426.4 million barrels, while distillate stockpiles fell 428,000 barrels to 107.4 million barrels.

The two countries remained far apart on resolution pathways. A senior Iranian official told Reuters that Tehran was reviewing Washington's response to its proposals, signaling continued dialogue but no breakthrough. Market participants indicated they would require concrete action rather than rhetoric to sustainably reduce geopolitical premiums in oil pricing.