Oil drops to more than two-week low on hopes of Hormuz reopening

Oil prices dropped more than 2% on Wednesday, hitting a low not seen in more than two weeks, according to Business Recorder. The slide followed progress in talks between Iran and Oman, which lifted hopes that the Strait of Hormuz could reopen and ease shipping disruption in the region. Brent crude fell $2.23, or 2.52%, to $86.35 a barrel, while West Texas Intermediate lost $1.97 to $80.39, with both benchmarks reaching levels last seen on August 10 during the session.

The Revolutionary Guards spokesperson said, as reported by the semi-official Tasnim news agency, that Iran and Oman had reached accords on how they divide control and revenue from the waterway. The spokesperson also accused the United States of obstructing talks, which has delayed them. Shipping remains subdued: only five commodity vessels crossed the strait on Tuesday, according to preliminary Kpler data, compared with a 10-day average of 15.

Analysts at SEB Research and Saxo Bank said the market has shifted from pricing prolonged disruption toward partial reopening and a smaller chance of renewed military confrontation. Separately, Pakistan's interior minister said on Tuesday, after a Tehran visit, that talks with Iran had achieved notable advances on the wider conflict. Washington, meanwhile, expanded sanctions on Iran on Monday and warned of penalties for countries doing business with Tehran, though these would not be imposed immediately.