WASHINGTON (dpa-AFX) - Extending the losses from the two previous sessions, crude oil prices have inched lower on Wednesday, with disappearing geopolitical risk premium following the U.S. reassurance on the reopening of Strait of Hormuz and a deal with Iran continuing to boost market sentiment.
WTI Crude Oil for September month delivery was last seen trading down by $0.49 (or 0.65%) at $75.28 per barrel.
The Middle East crisis that began following the attacks on Iran by U.S.-Israeli forces on February 28 kept pushing crude oil prices up north day by day.
Soon after the breakout of war, Iran shut the Strait of Hormuz, leading to the stranding of hundreds of ships carrying oil and other commodities.
Despite some brief 'pauses' for a few days intermittently, the conflict has gone on to reach its sixth month.
On Sunday, U.S. President Donald Trump announced that talks with Iran are set to begin on Monday afternoon. However, Iran denied any planned talks with the U.S.
On Tuesday, U.S. Treasury Secretary Scott Bessent stated that negotiations with Iran are ongoing and reassured that the Strait of Hormuz could reopen in a couple of days.
Market participants reacted positively after Qatar reiterated that mediatory efforts (along with Pakistan and Oman) to secure a deal between the U.S. and Iran are making progress.
Late Tuesday, Trump also reasserted that talks with Iran are going nicely and the strait could reopen very soon. However, he cautioned that in case Iran fails to reach a deal, the U.S. may revert back to its military offensive.
Market sentiment received a boost with these developments and crude oil prices began to decline.
Separately, according to a report by The Associated Press which cited two two regional officials, negotiators from Iran and Oman have finalized a draft deal to reopen the Strait of Hormuz. This agreement is reportedly tied to the June 17 Memorandum of Understanding between the U.S. and Iran.
Axios reported that the U.S., Iran, and Oman are closing in on an interim agreement to reopen the strait.
In the agreed 60-day period, no tolls or fees would be charged. All inbound traffic would go through Iranian waters and all outbound traffic would go through Omani waters. The parties would clear all naval mines laid by Iran in 30 days.
Ship-tracking data from Kpler showed that traffic was little changed yesterday from the previous day.
Eight vessels transited the Strait of Hormuz, including five tankers and three bulk carriers, the same as the previous day. Out of the eight, three tankers and three bulk carriers were entering the strait while a gas carrier and a tanker were exiting.
Nearly 130 to 140 vessels moved in and out of the Hormuz region before the war between the U.S. and Iran started.
According to the American Petroleum Institute, crude oil inventories increased by 2,690,000 barrels for the week ending July 31, defying expectations of a 2,000,000-barrel draw.
According to the U.S. Energy Information Administration, for the week ending July 31, crude oil inventories increased by 2,479,000 barrels, compared with market expectations for a 1,500,000-barrel draw. At Cushing's Oklahoma Delivery Hub, the inventories increased by 2,356,000 barrels.
For the same period, gasoline inventories decreased by 1,643,000 barrels, while distillate inventories decreased by 3,473,000 barrels, and heating oil inventories decreased by 144,000 barrels.
Meanwhile, as the U.S.-Iran conflict is showing symptoms of easing, Yemen's Houthi rebels announced attacking a vessel in the Red Sea, keeping the Middle East tensions alive.
This follows an earlier attack on an Indian-flagged cargo vessel MSV Faize Noore Oliya off the coast of Yemen on August 4.
The U.S. dollar index was last seen trading at 99.65, down by 0.21 (or 0.21%) today.
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