Expectations that negotiations between Iran and Qatar would open the Strait of Hormuz and lessen supply disruptions from the Middle East war caused oil prices to drop more than $1 on Thursday, continuing a run of declines.
At 0800 GMT, Brent crude futures were down $1.36, or 1.55%, to $86.48 per barrel, setting up a fourth day of drops. In course for a fifth day of losses, West Texas Intermediate oil futures dropped $1.40, or 1.7%, to $80.83.
According to Tim Waterer, chief market analyst at KCM, “oil has weakened again today due to rising expectations that a deal could materialize which would increase shipping numbers through the Strait of Hormuz.”
“If Hormuz were to reopen more fully, a further leg lower in crude is possible, but the market is unlikely to price a complete return to pre-conflict levels overnight.”
On Thursday, the prime minister of Qatar will travel to Iran to resume diplomatic negotiations aimed at resolving the issue, which has been going on for almost six months.
The visit takes place as the conflict approaches its sixth month, with fighting mostly on hold and little signs of a diplomatic settlement. Control of the Strait of Hormuz, a chokepoint for international oil supplies that Tehran has utilized as leverage, is a source of contention between the two parties.
Due to its vital significance as a transit route for exports from major Gulf producers, the strait, which handled around one-fifth of the world’s daily oil and liquefied natural gas supplies before to the crisis starting in late February, has been at the center of worries about global energy supplies.
