Oil prices fell toward a weekly loss on Friday as investors weighed mounting obstacles to a proposed deal between Iran and Oman to reopen the Strait of Hormuz, the critical waterway through which a fifth of the world’s seaborne oil and LNG flows. Brent crude slipped 33 cents to $79.12 a barrel, while U.S. West Texas Intermediate dropped 42 cents to $74.80.
Iran’s Foreign Ministry disclosed this week that Tehran and Oman had reached an understanding on the geographic coordinates for a commercial shipping route through the strait, with a joint announcement being finalized. President Donald Trump suggested a deal could be announced soon, raising hopes for an end to the five-month conflict that has upended global energy markets since U.S.-Israeli strikes on Iran began in late February.
However, U.S. officials have repeatedly insisted they would never agree to Iran controlling access to one of the world’s most critical energy chokepoints. The proposed arrangement would effectively give Tehran veto power over shipping lanes used by Saudi Arabia, Iraq, Kuwait, the UAE and Qatar to export the bulk of their crude and natural gas supplies.
The conflict shut in an estimated 10.5 million barrels per day of Middle Eastern crude production at its peak, forcing countries worldwide to draw down strategic reserves and seek alternative supply routes. An interim peace agreement signed on June 17 partially reopened the strait, but shipping volumes remain well below pre-war levels as military blockades and security concerns persist.
Analysts at Nomura Securities noted selling pressure emerged after reports of progress in the Iran-Oman talks, with prices returning to levels seen when the June interim deal was signed. The market appears torn between optimism about a broader resolution and deep skepticism that Washington would accept terms giving Iran lasting control over the strait.
The broader energy market remains on edge as August approaches. ADNOC’s executive vice president for sales and trading warned last month that this month could mark a tipping point for sharply higher oil prices if global demand recovers while the supply crisis persists. Some analysts project Brent could spike to $120 to $130 per barrel if diplomatic efforts fail and peak summer demand hits simultaneously.
Natural gas markets have also been roiled, with U.S. LNG exports running at elevated levels as Asian and European buyers compete for non-Hormuz supply. The crisis has accelerated investment in pipeline bypass capacity and export infrastructure across North America, with new projects totaling nearly 45 billion cubic feet per day slated for 2026 and 2027.
Sources: The Express Tribune, Quartz, Chennai Online
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