Oil prices fell further on Thursday as expectations of renewed diplomatic efforts involving Iran and Qatar raised hopes that the Strait of Hormuz could eventually reopen, easing disruptions to global energy supplies.
Brent crude futures fell 41 cents, or 0.5%, to $87.43 a barrel at 3:30 GMT, putting the benchmark on track for a fourth consecutive session of declines. West Texas Intermediate crude futures dropped 37 cents, or 0.5%, to $81.86 a barrel, its fifth straight day of losses.
The decline came as markets weighed efforts to resolve the war in West Asia, which has severely disrupted oil and gas shipments through the Strait of Hormuz, a key route for global energy supplies.
Hormuz reopening remains in focus
Iran and Oman are working to finalize details of an agreement concerning the Strait of Hormuz, a senior Iranian source said on Wednesday, as reported by Reuters. Iran's Revolution Guards Corps had earlier said the two countries had agreed on how to share control of the waterway, which connects major Gulf oil producers with international markets.
Before the US-Israeli war on Iran began on February 28, the strait carried oil and natural gas shipments equivalent to about one-fifth of global consumption of the fuels. Since Iran moved to shut the waterway in response to the conflict, oil flows have fallen to about one-quarter of their pre-war level, according to ship-tracking data.
"Crude oil edged lower as the prospect of the Strait of Hormuz reopening improved amid ongoing talks," said Daniel Hynes, senior commodity strategist at ANZ, in a note on Thursday, but he cautioned "concerns over shortages in the oil market persist".
Qatar's prime minister is due to travel to Iran on Thursday to relaunch diplomatic talks aimed at ending the conflict, which has lasted nearly six months.
The US has halted its attacks on Iran for about a month while seeking to increase economic pressure on Tehran, boosting investor expectations that disruptions to Gulf energy supplies could ease. However, Iran and the United States remain far apart over the terms for ending the war.
On that note, Iranian officials have said the strait would not reopen unless the US agreed to the terms of an interim ceasefire reached in June that later unraveled.
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