Oil Prices Slip on Hopes for US-Iran Deal Following Oman-Mediated Talks

Oil prices fell on Thursday amid signs of diplomatic progress that could lead to a U.S.-Iran peace deal, potentially easing geopolitical tensions and increasing global crude supply. The potential breakthrough follows talks mediated by Oman aimed at ending the five-month conflict.

By 0024 GMT, Brent crude futures had dropped 37 cents, or 0.5%, to $79.08 a barrel. U.S. West Texas Intermediate (WTI) futures fell further, declining 53 cents, or 0.7%, to $74.69 a barrel.

Diplomatic Developments

Investor sentiment shifted after Reuters reported on a proposed deal between Iran and Oman to help resolve the U.S.-Iran conflict. Citing a senior Iranian source and two regional officials, the report indicated the proposal would grant Tehran control over ships transiting the Gulf through the Strait of Hormuz—a major potential concession.

There was no immediate comment from the U.S. on the proposal. While U.S. officials have previously stated they would not agree to Iranian control over the critical energy trade route, the talks signal a potential path toward de-escalation.

Market Analysis and Headwinds

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Analysts noted that the selling pressure reflects optimism for a resolution. "Prices have simply returned to the levels seen when the United States and Iran signed an interim peace agreement on June 17," said Yuki Takashima, an economist at Nomura Securities, in a comment to Reuters.

However, optimism is tempered by ongoing regional risks. Yemen’s Iran-aligned Houthis claimed on Wednesday to have launched missile attacks on two separate Saudi oil tankers, though Saudi Arabia has not confirmed either incident. These persistent threats continue to add a risk premium to prices.

US Inventory Data Adds Pressure

Adding to the downward pressure on prices was a bearish report from the U.S. Energy Information Administration (EIA) on Wednesday. The data showed that U.S. crude inventories unexpectedly rose by 2.5 million barrels to 407 million barrels for the week ending July 31.

The build in stockpiles, driven by slightly lower refinery processing and higher imports, ran counter to analysts' expectations in a Reuters poll, which had forecast a 1.5 million-barrel draw.