Global oil prices dropped sharply on Tuesday after United States President Donald Trump expressed confidence that a deal to reopen the strategic Strait of Hormuz could be reached soon, while warning that Iran would face severe consequences if negotiations failed.
Trump, speaking during a visit to California, said discussions were progressing well and claimed Iran was eager to end months of conflict.
“We’re having very good discussions,” Trump said. “The Strait of Hormuz will open very soon, or Iran will be hit very hard.”
Naijaonpoint reports that Trump’s comments came shortly after US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent disclosed that diplomatic efforts had made significant progress and that commercial shipping through the waterway could resume later this week.
The optimism surrounding the negotiations immediately affected the global oil market.
Brent crude, the international benchmark for oil prices, fell by nearly five per cent on Tuesday to below $80 per barrel. Prices continued to slide on Wednesday, declining by another 0.7 per cent during Asian trading.
In the United States, West Texas Intermediate crude also dropped by more than five per cent to around $76 per barrel.
Both oil benchmarks reached their lowest levels since July 13, reflecting growing confidence among investors that one of the world’s most important shipping routes could soon reopen.
However, analysts warned that oil prices remain highly unstable because previous attempts to end the conflict have repeatedly collapsed.
US Officials Express Optimism
Rubio said negotiations involving Iran and Oman had produced encouraging results, although a final agreement had yet to be reached.
“There’s been progress made in those talks, but not finality yet. We’re hoping that will happen very shortly,” he told reporters at the State Department.
Bessent also expressed optimism, saying an agreement could be concluded within days.
“There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalised position in this conflict,” he said during an interview with CNBC.
When asked whether Iran would be permitted to collect charges from ships using the route, Bessent replied, “It would be freedom of movement.”
Despite the optimism from Washington, officials have not revealed details of what any agreement would involve.
Iran Denies Direct Negotiations With US
Iran, however, insisted it is not holding direct negotiations with the United States.
Instead, Tehran said discussions are taking place with Oman, which has continued to act as a mediator between both countries.
A spokesperson for Iran’s Foreign Ministry described the talks with Oman on developing a new mechanism for vessels passing through the Strait of Hormuz as positive.
Qatar, another key mediator between Washington and Tehran, also confirmed that diplomatic efforts were ongoing but admitted that no direct talks between the US and Iran were currently planned.
Naijaonpoint reports that the Strait of Hormuz remains one of the world’s most important maritime routes.
Before the conflict erupted in late February, nearly one-fifth of global daily oil and liquefied natural gas supplies passed through the narrow waterway.
Since fighting began, Iran has halted most commercial traffic through the strait, while the United States has imposed a naval blockade around Iranian ports in the region.
The US Central Command, however, said the southern route through the Strait of Hormuz remains open for commercial vessels navigating international waters.
“The southern route through the Strait of Hormuz remains free and open for all commercial vessels seeking to transit the international waterway,” the military command stated.
Meanwhile, another blockade imposed by Yemen’s Iran-backed Houthi rebels has disrupted shipping through Saudi Arabian ports along the Red Sea since July 20.
That route had become an important alternative after traffic through Hormuz was restricted, but it has also become increasingly dangerous following a series of attacks on commercial vessels.
On Tuesday, an Indian-flagged ship was reportedly struck by a projectile near Yemeni waters. India’s shipping minister confirmed that all 14 crew members were rescued safely.
As the war drags on, reports suggest the United States has significantly depleted its stockpile of long-range precision missiles.
According to sources familiar with the matter, the US has used nearly all of its global inventory of the weapons during the ongoing conflict.
The development highlights the growing pressure on both military resources and diplomatic efforts to end the crisis.
Although oil prices have fallen in recent days, motorists across the world are still paying significantly higher fuel prices.
In the United Kingdom, the average price of petrol has climbed to £1.60 per litre, returning to levels recorded at the beginning of the conflict.
In the United States, the average gasoline price has risen above $4 per gallon, while diesel now costs nearly $5.40 per gallon.
Oil prices have repeatedly surged above $120 per barrel whenever tensions intensified, before dropping again whenever fresh negotiations raised hopes of peace.
The volatility has enabled major energy companies, including BP, Shell, Chevron and Exxon Mobil, to post strong profits.
Financial analysts say investors are reluctant to celebrate too early because previous peace efforts have repeatedly failed.
Head of Financial Analysis at AJ Bell, Danni Hewson, said markets remained cautious despite the latest progress.
“Investors are acutely aware of how many times we’ve already been at this point in the war and how fragile the process of securing lasting agreements can be,” BBC quoted Hewson as saying.
She added that despite the huge profits being recorded by global oil companies, they remained “at the mercy” of President Trump’s unpredictable decisions.
Earlier this week, Trump warned that Iran was facing its “last chance” to reach an agreement that would allow commercial shipping to resume through the Strait of Hormuz.
He also claimed he had cancelled planned “massive” military strikes to give diplomacy another opportunity.
