Oil Prices Dip as Qatar, Oman Champion Middle East Peace Effort
Oil prices extended losses on Thursday as diplomatic efforts involving Iran, Qatar and Oman eased supply concerns, while Washington’s shift toward economic pressure on Tehran and rising US crude inventories weighed on prices.
International benchmark Brent crude futures for November delivery traded at $85.80 per barrel, down 1.3% from the previous close of $86.94.
US benchmark West Texas Intermediate (WTI) crude futures for October delivery traded at $81.09 per barrel, down 1% from $81.81. Expectations for progress on reopening the strategic waterway contributed to the decline in oil prices.
Qatari Prime Minister and Foreign Minister Mohammed bin Abdulrahman Al Thani is expected to travel to Tehran on Thursday to meet Iranian officials for talks aimed at de-escalating regional tensions and advancing negotiations over the Strait of Hormuz.
The visit came days after an agreement between Iran and Oman to activate a joint corridor through the strait.
Iranian Deputy Foreign Minister Kazem Gharibabadi announced the agreement, saying the US and other countries should understand that the Strait of Hormuz would reopen only under arrangements determined by Tehran.
Reduced prospects of renewed US military strikes against Iran also eased concerns over further supply disruptions, weighing on crude prices.
US Secretary of State Marco Rubio reportedly told foreign ministers from allied countries that Washington plans to prioritize economic pressure over further military strikes as part of its strategy toward Iran.
Rubio has told several allied foreign ministers that Washington does not expect to launch new strikes against Iran “for the time being,” Axios reported Tuesday.
Citing US officials, the report said Washington plans to intensify economic pressure on Tehran through a naval blockade and tighter sanctions, while seeking to facilitate as much Iranian oil as possible through the Strait of Hormuz into global markets.
Stronger-than-expected US inflation data reinforced expectations that the Federal Reserve (Fed) could maintain its restrictive monetary policy for longer, putting downward pressure on oil prices.
The personal consumption expenditures (PCE) price index rose 0.2% month-on-month in July, above market expectations, while the US economy expanded 1.5% in the second quarter, in line with forecasts.
Following the data, markets turned their attention to Fed Chair Kevin Warsh’s remarks at the Jackson Hole symposium on Friday for further clues on the monetary policy outlook.
Expectations for an October rate hike rose to 62% from 57%, while the US 10-year Treasury yield climbed to around 4.66%.
Higher interest rates could strengthen the US dollar and dampen economic activity and oil demand, putting downward pressure on crude prices.
Meanwhile, commercial crude oil inventories in the US, the world’s largest oil consumer, rose slightly, with the increase coming in well below expectations.
US commercial crude inventories rose by around 100,000 barrels to 428.9 million barrels last week, according to data from the Energy Information Administration (EIA). The market expectation was for a build of around 1.6 million barrels.Oil Prices Dip on Fed Rates Uncertainty, Canada Tariff Retaliation
