(RTTNews) – Extending the heavy losses from yesterday’s session, crude oil prices have gone for a freefall on Tuesday after U.S. expressed optimism on an agreement with Iran to reopen the Strait of Hormuz by tomorrow. Later, Qatar confirmed that mediatory efforts to secure U.S.-Iran deal are progressing well.
WTI Crude Oil for September month delivery was last seen trading down by $4.66 (or 5.80%) at $75.68 per barrel.
Crude oil prices slumped sharply after U.S. Treasury Secretary Scott Bessent confirmed today that the U.S. is in talks with Iran.
In CNBC’s “Squawk Box” program, Scott Bessent stated that there is a chance that an agreement between the U.S. and Iran could be reached by Tuesday or Wednesday on the reopening of the Strait of Hormuz. Bessent remarked that from thereon, the talks could move towards a more normalized position in the ongoing conflict.
When asked if Iran would be permitted to charge a toll, Bessent stated that it would be freedom of movement, indicating that the traffic would be free for all international ships.
Bessent predicted that when hundreds of ships stranded in the Persian Gulf start moving, oil and energy prices would fall eventually.
Last Friday, U.S. President Donald Trump announced plans to hit Iran in a never-before-seen scale.
However, late Saturday, he called off the strikes to offer diplomacy a chance.
On Sunday, Trump stated that fresh talks with Iran would resume from Monday afternoon.
However, Iran denied any ongoing talks or any planned negotiations with the U.S. Iran’s Foreign Ministry stated that Iran was in talks only with Oman regarding the management of the Strait of Hormuz, and not with the U.S.
Frustrated by Iran’s denial, through Truth Social, Trump called the ruling regime of being duplicitous and announced that whether Iran acknowledges or not, the U.S. was in talks for a resolution of the crisis. Further, Trump asserted that the U.S. was in complete control of the Strait of Hormuz region.
Later, Trump stated that he cancelled the planned attacks on Iran at the request of leaders of Qatar, Saudi Arabia, and the United Arab Emirates to allow talks to go on but warned that this would be the last chance for Iran.
The U.S. and Iran agreed to halt their attacks and sought to resolve their disputes through peace talks when they signed a Memorandum of Understanding on June 17. However, both sides began trading attacks at each other in less than a month rendering the MoU null and void.
As a result, the Strait of Hormuz remained largely shut for shipping traffic except for a few ships either traveling without letting their locations known or by coordinating with Iranian authorities.
Fearing attacks by drones or missiles, shipowners refrained from allowing their fleet to move despite U.S. Central Command assuring their safety.
In this backdrop, today’s announcement by Bessent offered a breather to markets.
Tensions eased further after Qatar’s Foreign Ministry spokesperson Majed al-Ansari stated that the mediation efforts to end the U.S.-Iran conflict are making progress and the diplomatic contacts have reached very progressive stages.
Bloomberg reported that traffic at the Strait of Hormuz remained subdued as of Tuesday due to safety concerns.
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