Crude extends losses on hopes of Iran-Qatar talks to reopen Strait of Hormuz
Crude futures marked their fourth and fifth consecutive days of decline as diplomatic efforts to restore Gulf oil flows temper market fears over prolonged supply constraints.
On Thursday, Brent crude futures dropped 60 cents, or 0.7 percent, to settle at $87.24 a barrel, logging a fourth straight session of losses. West Texas Intermediate crude also shed 56 cents, or 0.7 percent, reaching $81.67 a barrel for its fifth consecutive daily decline. The slide reflects growing investor optimism that diplomatic maneuvers may soon alleviate severe energy supply disruptions in the Middle East.
Qatar’s prime minister is scheduled to visit Iran on Thursday to revive negotiations aimed at ending the nearly six-month conflict. These diplomatic efforts follow indications from a senior Iranian source on Wednesday that Iran and Oman are finalizing an agreement to jointly manage the Strait of Hormuz. Iran’s Revolutionary Guards previously noted that the two nations had reached an understanding regarding shared control of the waterway and its associated revenues.
The strategic waterway is critical to global energy markets, having facilitated oil and natural gas shipments equivalent to roughly one-fifth of global fuel consumption before the US-Israel war with Iran began on February 28. Since Iran moved to restrict traffic in response to the hostilities, ship-tracking data shows oil flows have plummeted to approximately one-quarter of their pre-war volumes.
The United States has paused its attacks on Iran for about a month to pivot toward economic pressure, raising investor hopes that Gulf energy supply disruptions could ease. Despite this pause, Tehran and Washington remain far apart on the conditions necessary to end the hostilities. Iranian officials have indicated the strait will stay closed unless Washington accepts Tehran’s demands under a collapsed June interim ceasefire agreement, even as shipping in the Gulf continues to face targeting.
Global Diesel Supply Tightens
Beyond crude benchmarks, the broader conflict is exerting severe pressure on the global diesel market, according to ANZ’s Hynes. Fighting has damaged Middle Eastern refineries, while Ukrainian strikes on Russian facilities have curtailed exports from a major global supplier.
This production shortfall is already materializing in inventory data. The US Energy Information Administration reported Wednesday that US distillate inventories, encompassing diesel and heating oil, dropped by 2.2 million barrels for the week ended August 21, leaving total stocks at 103.4 million barrels.
