Oil declines amid hopes of a US-Iran deal

Oil prices fell on Thursday as investors assessed whether progress in talks between Iran and Oman would pave the way for a deal between the United States and Iran to end the five-month war and reopen the Strait of Hormuz.

Brent crude rose slightly at settlement on Wednesday, while U.S. crude dipped slightly.

Yuki Takashima, economist at Nomura Securities, said, “Some selling pressure emerged following reports of progress in talks between Iran and Oman.”

He added that prices had returned to levels seen when the United States and Iran reached a temporary agreement on June 17, with investors closely monitoring whether the two sides would be able to reach a final deal.

A senior Iranian source and two regional officials told Reuters on Wednesday that a proposed agreement between Iran and Oman to help end the conflict between the United States and Iran would grant Tehran control over ships entering the Gulf via the Strait of Hormuz, which would represent one of the largest concessions to Iran to date.

The United States has not yet commented on the proposal.

While President Donald Trump says a deal to reopen the strait is imminent, U.S. officials insist they will never agree to Iran controlling navigation on the world’s most critical energy trade route.

Five sources said Iran warned Gulf states that it would target critical energy infrastructure across the region in response to any new U.S. attack on its territory, as Tehran seeks to raise the cost of any military action by threatening Washington’s closest allies in the region.

Meanwhile, data from the U.S. Energy Information Administration on Wednesday showed that U.S. crude oil inventories rose as refinery utilization rates dipped slightly and imports increased modestly.

The EIA said crude stocks rose by 2.5 million barrels to 407 million barrels in the week ending July 31, compared with analysts’ expectations in a Reuters poll for a decline of 1.5 million barrels.