Global oil benchmarks experienced a significant decline on Tuesday as U.S. officials signaled potential progress in diplomatic efforts to reopen the Strait of Hormuz. Brent crude dropped nearly 5% to fall below $80 per barrel, while U.S. West Texas Intermediate saw a similar decline, settling at $76 per barrel. Both figures represent the lowest price points since July 13.

U.S. Secretary of State Marco Rubio and Treasury Secretary Scott Bessent indicated that discussions involving Iran and Oman have advanced, with the possibility of an agreement to resume shipping as early as this week. Bessent noted that a deal could facilitate a return to "freedom of movement" in the waterway. However, the specific terms of any potential agreement remain undisclosed.

The diplomatic landscape remains complex, as Iran has publicly denied engaging in direct negotiations with the U.S., stating instead that it is communicating with Oman regarding new mechanisms for vessel transit. Qatar, another mediator, confirmed that while diplomatic efforts are ongoing, no direct talks between Washington and Tehran are currently scheduled.

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The Strait of Hormuz, which previously accounted for approximately 20% of global daily oil and liquefied natural gas supplies, has seen most traffic halted since the conflict began in late February. The situation is further complicated by a naval blockade of Iranian ports and ongoing disruptions in the Red Sea, where Houthi forces have targeted commercial vessels. Recent instability, including the sinking of an Indian-flagged ship near Yemeni waters, has kept market volatility high.

Market analysts remain cautious, noting that previous attempts to de-escalate the situation have failed, leading to significant fluctuations in fuel costs for consumers globally. While lower oil prices provided a boost to U.S. stock markets on Tuesday, industry experts emphasize that the energy sector remains highly sensitive to political developments and the ongoing conflict.

Source: BBC News