DUBAI – Global oil prices edged lower as investors weighed the possibility of an agreement between the United States and Iran that could ease tensions and restore normal shipping through the Strait of Hormuz.
Brent crude fell by 37 cents, or 0.5%, to $79.08 per barrel, while US West Texas Intermediate (WTI) crude declined by 53 cents, or 0.7%, to $74.69 per barrel.
The modest decline followed a slight increase in Brent prices at the close of trading on Wednesday.
Market sentiment was influenced by signs of progress in talks between Iran and Oman, along with growing expectations that Washington and Tehran could reach an agreement to reduce tensions.
Investors believe a deal could potentially bring an end to the five-month-old conflict between the two sides and lead to the Strait of Hormuz being fully reopened to maritime traffic.
The Strait of Hormuz is a critical global energy corridor through which a significant share of the world’s oil supplies passes. Any disruption to shipping through the waterway can have a direct impact on global crude prices and energy markets.
Traders are therefore closely monitoring diplomatic developments between Iran, Oman and the United States for indications that tensions could ease and oil supplies could become more secure.
Despite the latest decline, market participants remain cautious, as uncertainty surrounding the regional situation continues to pose risks to crude supply and transportation.
A sustained improvement in diplomatic relations and the reopening of the Strait of Hormuz could reduce the risk premium built into oil prices, while any renewed escalation could have the opposite effect.
