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US Oil Update: Crude Oil Futures Extend Fall on Positive Iran-Oman Talks

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Global oil benchmarks extended declines on Wednesday, falling more than 2% as diplomatic headway between Iran and Oman over the Strait of Hormuz cooled supply anxieties, though analysts warn that full market normalization requires broader sanctions relief.

Front-month West Texas Intermediate crude tumbled by 1.8% to $80.88 per barrel, while Brent futures were down 1.9% to $86.88/bbl.

"Oil fell as Iran and Oman are discussing a temporary joint maritime corridor in the Strait of Hormuz, with talks aimed at a permanent traffic and security framework," Saxo Bank analysts said.

A spokesperson for Iran's Revolutionary Guards, as reported by Tasnim, stated that Iran and Oman have reached a mutual accord concerning control and revenue-sharing within the strategic Strait of Hormuz.

"However, any agreement between these two parties does not mean we will see normalisation in oil flows through the key chokepoint. We would likely need to see the US lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalization," ING said.

On the supply side, the American Petroleum Institute reported a 4.2-million-barrel build in US crude inventories for the week ending August 21.

The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.

Meanwhile, despite ongoing framework discussions to restore safe passage, commercial vessel traffic through the strategic Strait of Hormuz remains subdued as persistent security risks linger.

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