Oil prices slip as Iran reports progress with Oman on Hormuz shipping route agreement

— Oil prices eased on Thursday after Iran announced progress in talks with Oman over a proposed shipping route through the Strait of Hormuz, raising cautious hopes for a potential resumption of energy flows through one of the world’s most critical maritime chokepoints.

Brent crude futures fell 33 cents, or 0.42 per cent, to $79.12 a barrel, while U.S. West Texas Intermediate declined 42 cents, or 0.56 per cent, to $74.80 a barrel, as investors weighed diplomatic developments against lingering security concerns in the region .

Progress in Talks

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei confirmed on Wednesday that Tehran and Oman have reached an understanding on the geographic coordinates for a shipping route through the Strait . He indicated that a joint announcement is in the final stages of review and drafting, provided certain third parties do not obstruct the process .

Deputy Foreign Minister Kazem Gharibabadi told Iran’s IRNA state news agency that the two sides have reached fundamental understandings on the maps, with large parts of the shipping route set to pass through Iran’s territorial waters and some through Oman’s waters .

Tehran’s Control Sticking Point

However, a proposed deal under negotiation would give Tehran control over ships entering the Gulf through the Strait, according to a senior Iranian source and two regional officials who spoke to Reuters . Before the war began when the US and Israel attacked Iran on February 28, the waterway carried about a fifth of global oil and LNG supplies without charge and was open to all shipping .

Iran has enforced a near-total closure of the Strait in retaliation for the attacks, while Washington has maintained a naval blockade of Iran-related shipping and ports . Under the emerging terms, vessels heading into the Persian Gulf would transit a channel controlled by Iran close to its coast, while ships leaving would travel on a channel near Oman .

A further sticking point concerns proposed fees — Iran is seeking between 5 and 7 per cent of the value of cargoes, while Oman has floated around 3 per cent and Washington wants none .

U.S. Hesitation

While President Donald Trump has suggested an agreement reopening the Strait could be imminent, U.S. officials have repeatedly insisted they would never agree to Iran controlling access to the vital energy route . Axios, citing sources, reported that Washington is aiming for a deal announcement, though Iranian state media indicated an agreement would be delayed as long as the U.S. continues to threaten Iran .

“There was no immediate U.S. comment on the proposal,” Reuters reported, underscoring the uncertainty surrounding the diplomatic efforts .

Houthi Attacks Undermine Optimism

Concerns over ongoing attacks in the Red Sea also limited any bullish momentum. Yemen’s Iran-aligned Houthis claimed on Wednesday they had launched missile attacks on a Saudi oil tanker off the kingdom’s Red Sea port of Yanbu, and another Saudi tanker in the Gulf of Aden, though there was no confirmation from Riyadh .

“It does not change our cautious stance yet given the uncertain process ahead,” said Yuki Takashima, economist at Nomura Securities . The Houthi threats also undermine Saudi Arabia’s efforts to use the Red Sea route as an alternative export corridor while Hormuz remains restricted .

Market Context

Prices have returned to levels seen in June, when the U.S. and Iran signed an interim peace agreement, with investors now closely watching whether a final comprehensive deal can be reached . Gulf countries’ crude oil and condensate exports were largely steady in July and remained about 40 per cent below pre-war levels, shipping data showed .

Analysts noted that meaningful progress in U.S.-Iran discussions is essential before disrupted energy flows can realistically resume , while warnings from international agencies earlier this year highlighted that global oil inventories are being depleted at a record pace due to the loss of supplies through the chokepoint .