Oil slips below $94 as US-Iran talks raise Hormuz reopening hopes

Global oil prices extended losses in Asian trade on Tuesday, with Brent crude slipping below $94 a barrel after reports that the United States and Iran were discussing a plan to reopen the Strait of Hormuz following a possible agreement to end hostilities.

Brent crude futures for August delivery fell $6.56, or 6.55 per cent, to $93.65 a barrel, while US West Texas Intermediate (WTI) crude hovered around $91 a barrel after tumbling more than 6 per cent in the previous session.

The sharp decline followed a report by Japanese newspaper Nikkei that the US and Iran were discussing a roadmap to reopen the Strait of Hormuz about 30 days after reaching a deal to end the conflict that has disrupted global energy flows for months.

According to the report, Iran would begin clearing mines from the strategic waterway during a 30-day transition period after a peace agreement is reached. Once the process is completed, ships from all countries would be allowed to navigate the strait freely and safely, while Iran would also stop collecting transit fees.

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The report further said that a ceasefire agreed earlier in April could be extended by another 60 days to facilitate negotiations on Iran’s nuclear programme alongside broader peace talks.

The Strait of Hormuz, which carries nearly one-fifth of global oil consumption, has remained heavily disrupted since the outbreak of hostilities in West Asia earlier this year, triggering fears of supply shortages and sending crude prices sharply higher.

Oil prices had already fallen nearly 7 per cent on Monday amid growing optimism that Washington and Tehran were edging closer to a diplomatic breakthrough.

Iran’s top negotiator and foreign minister were reportedly in Doha for discussions with Qatar’s prime minister on a possible framework agreement with the US to halt the three-month-long conflict.

US President Donald Trump said on Monday that talks with Iran were progressing “nicely”, although he warned that military action could resume if negotiations failed.

Despite the optimism, analysts warned that a full restoration of oil flows may still take months even if a formal peace deal is achieved.

Analysts also noted that damaged oil and gas infrastructure across the region would continue to weigh on supply even after any diplomatic breakthrough.

Meanwhile, ship-tracking data showed limited energy shipments had resumed through the strait in recent days, including liquefied natural gas cargoes headed to Pakistan, China and India, along with an Iraqi crude supertanker bound for China after being stranded for nearly three months.