Oil Prices Fall as U.S. Signals Possible Hormuz Agreement
Oil prices dropped sharply Tuesday after Treasury Secretary Scott Bessent said the United States and Iran could reach an agreement within days to restore freedom of navigation through the Strait of Hormuz.
Brent crude, the international benchmark, fell 5.3 percent to close at $79.36 per barrel, while West Texas Intermediate futures declined 5.7 percent to $75.77. The market reaction followed Bessent’s statement that negotiations with Tehran were underway and could produce a deal Tuesday or Wednesday.
Bessent said the proposed arrangement would provide freedom of movement rather than permit Iran to charge ships a toll. Separately, diplomats said Tehran was considering allowing European countries to remove mines from the waterway, a significant barrier to restoring regular commercial traffic.
President Donald Trump said over the weekend that he canceled a major planned attack on Iran to create space for negotiations. A previous U.S.-Iran agreement, signed June 17, was intended to reopen the strait but quickly broke down.
Disputes remain over control of shipping routes. Iran wants commercial vessels to pass through its territorial waters, while ships traveling near Oman have operated under U.S. military protection. Iran has repeatedly attacked vessels using that route. On Monday, a cargo ship was hit by an unidentified projectile northeast of Al Khasab, Oman, according to the United Kingdom Maritime Trade Operations Centre.
Analysts cautioned that any agreement could prove difficult to sustain. TD Securities commodity strategist Ryan McKay said Iran would be unlikely to accept a deal without gaining control over the strait. He also said oil shipments might not increase substantially after an agreement because current flows already broadly reflect the ongoing recovery in production. The developments leave negotiations moving forward, but with security, enforcement and control questions unresolved. Markets therefore remain sensitive to signs of progress, renewed attacks and details of any settlement.