Oil prices slipped again on Wednesday, marking a third consecutive day of declines as investors grew increasingly optimistic that the United States and Iran could reach an interim agreement to restore shipping through the Strait of Hormuz.
At 02:56 ET (06:56 GMT), October Brent crude futures fell 0.5% to $79.00 a barrel, while September West Texas Intermediate (WTI) crude futures declined 0.7% to $75.27 a barrel.
Both benchmarks had already dropped by more than 5% on Tuesday, adding to the steep losses recorded earlier in the week.
Diplomatic efforts continue to influence the market
According to an Axios report published on Tuesday evening, the United States, Iran and Oman are close to reaching an interim arrangement that would allow shipping to resume through the Strait of Hormuz, with Washington aiming to announce the agreement on Wednesday.
However, Iranian media reported that Tehran said reopening the strategic waterway would remain on hold while the United States continued to issue threats.
Qatar also confirmed on Tuesday that mediators had prepared a draft proposal as efforts continued to narrow differences between Washington and Tehran.
The Qatari government said US President Donald Trump discussed regional de-escalation during a phone call with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani.
The proposed agreement is intended to restore navigation through the Strait of Hormuz, a route that normally handles around one-fifth of global crude oil and liquefied natural gas shipments.
The latest diplomatic initiative follows comments from Trump that negotiations with Iran had begun and that Tehran had a “last chance” to secure an agreement.
Iran has continued to deny that formal negotiations with Washington are taking place, highlighting the uncertainty surrounding the diplomatic process.
Supply risks remain despite easing tensions
Although diplomatic developments have improved market sentiment, traders remain alert to ongoing geopolitical risks.
Another commercial vessel was reportedly attacked near the Strait of Hormuz on Tuesday, underlining the fragile security environment in the region.
Meanwhile, fresh US inventory data also weighed on oil prices.
The American Petroleum Institute (API) reported that US crude oil inventories increased by 2.69 million barrels during the week ended 31 July, contrary to analyst forecasts for a draw of approximately 2 million barrels.
Investors are now awaiting official figures from the US Energy Information Administration (EIA), due later on Wednesday, to determine whether government data confirms the unexpected build in stockpiles.