Oil prices fell on Tuesday after reports that Iran could reopen the Strait of Hormuz within seven days if the US takes initial steps to reduce military pressure. The news eased some fears about a major disruption to oil shipments through the key waterway.
The more actively traded November WTI contract also declined. Brent crude futures fell 89 cents, or 0.89%, to $99.45 a barrel at 0932 GMT. The October WTI crude contract, which expires on Tuesday, dropped $1.09, or 1.14%, to $94.69 a barrel. It was down $1.31, or 1.42%, at $91.06 a barrel, according to Reuters.
However, the possible reopening does not mean all problems have been solved. The oil market is also watching US President Donald Trump’s meetings with world leaders at the United Nations General Assembly this week. The meetings are taking place as tensions remain high in the Middle East and the war in Ukraine continues.
Because of reports that Iran could reopen the strait within seven days, according to Reuters, hamad Hussain, senior climate and commodities economist at Capital Economics, said oil prices appeared to be falling.
The fall in oil prices came after a senior Iranian government official told Kyodo News that Iran had offered to reopen the Strait of Hormuz within seven days if Washington first takes steps toward easing military pressure. He said the development could be a positive sign that diplomatic efforts may be making progress. Hussain said there could still be other issues to settle, including tolls and fees, before a lasting solution is reached.
Around 14 million barrels of Saudi crude were loaded onto seven supertankers inside the Gulf on Sunday, according to tanker-tracking data. Production at the Sharara field has dropped by about 200,000 barrels per day and is now between 100,000 and 105,000 barrels per day, two engineers at the field told Reuters. Al Jazeera reported over the weekend, citing Iran’s security chief Mohsen Rezaei, that Tehran had communicated its conditions to mediators for re-engaging in negotiations with Washington.
Iran has also been trying to set conditions for a return to talks. There is also a separate supply problem in Libya.
At the same time, Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York for the UN gathering . Libya’s National Oil Corporation said the valve closure caused a significant fall in production at the Sharara oilfield. Iran and the US exchanged threats on Sunday, adding to uncertainty around the situation. An armed group closed valve seven on the Sharara crude pipeline, which carries oil toward the Zawiya port, on Monday.
