Continuing their slide from the previous session, oil prices fell over 2% on Wednesday as the resumption of talks between Iran and Oman revived hopes of a potential reopening of the Strait of Hormuz.
A fifth of the world’s oil and liquefied natural gas (LNG) generally passed through the critical waterway before the US-Israel war on Iran started on February 28. Since then, it has largely remained closed and emerged as the centre of heightened tensions, especially with Washington and Tehran embroiled in a tussle over its control.
The international benchmark, Brent crude futures, dropped $1.78, or 2%, to $86.8 a barrel by 0027 GMT on Wednesday. At the time of writing, the price slipped slightly further to $86.274 (7:55 am IST). Meanwhile, US West Texas Intermediate crude futures fell $1.49, or 1.8%, to $80.87 (0027 GMT).
Both benchmarks slipped more than 3% the previous day. Iran and Oman’s continued talks over the Strait of Hormuz come as Tehran already faces intense “economic pressure” from US President Donald Trump. Last week, he threatened to hit Iran and countries supporting it with “draconian sanctions.”
Iran-Oman propose ‘temporary corridor’ through Hormuz
As part of a joint proposal, Iran and Oman discussed establishing a “temporary navigational corridor” through the Strait of Hormuz. Both countries have been engaged in talks on new shipping routes through the waterway for the past weeks.
According to a press statement from the Iranian and Omani foreign ministries, both sides discussed a “phased framework” for the proposed joint project to “clear mines.”
Tehran and Muscat will continue these talks with “the aim of reaching agreement on a permanent shipping corridor and the future administration of the Strait,” the official statement emphasised.
Oman News Agency (ONA) previously reported that Omani Foreign Minister Badr bin Hamad Al Busaidi visited Iran to hold discussions with his Iranian counterpart Abbas Araghchi. He eventually shared an update on X, saying that he was “hopeful” about the two sides subsequently announcing a “temporary corridor” for the waterway.
“Future management of the Strait and a permanent solution will follow in due course,” he said on X. “Discussions with regional partners will be conducted in support of peace and cooperation, stability and freedom of navigation.”
Similarly, Iran’s Araghchi wrote on X that the potential agreement displayed “Iran’s commitment to peace and stability is matched by steadfast diplomacy with our neighbours.”
Officials from Qatar, which has also extended support to Iran-Oman talks, held a telephone call with Araghchi to discuss the proposed temporary channel, according to the Gulf nation’s foreign ministry on Tuesday.
Trump doubles down on sanctions
The American president, on his part, stressed that all mines in the Hormuz Strait have been removed or detonated. He even went as far as threatening to target any boats that try to add more/
“Through Space Force, we are watching every square inch of the Strait, as we are, also, with Pickaxe Mountain and the already destroyed three other Nuclear sites. There is a Zero Tolerance policy on mine placement in full force and effect,” Donald Trump said on Truth Social.
Having repeatedly asserted that the US controls the strait, he has long insisted that the US armed forces have cleared mines from the crucial waterway, attempting to signal progress in the ongoing war on Iran.
The Republican leader doubled down on claims of imposing hefty sanctions against Iran, dubbing the campaign an “Economic D-Day,” and describing it as the “most crushing economic operation ever taken against any country.”
US Treasury Secretary Scott Bessent has since titled the initiative “Operation Economic Outcast,” as the US seeks to “sever every economic lifeline” supporting the Iranian government.
Among the several measures announced by Bessent’s Office of Foreign Assets Control, the Trump administration is sanctioning “over 60 entities, individuals, and vessels across the world.”
These entities have been accused of aiding Iran in procuring nuclear and missile technology, conducting cyber operations and generating oil revenue.
Moreover, the sanctions aim to damage five sectors crucial to Iran’s economy: technology, gold, digital assets, shipping and aviation.
In addition to exerting pressure on countries dealing with Iran, Bessent particularly singled out Iran’s Bank Melli, asserting, “Every Bank Melli branch must be shuttered.”
With a “zero-leakage approach” in mind, he also maintained that the US has outlined Iran’s networks used to “smuggle oil and evade sanctions” to eliminate revenue streams funding the Iranian government and the Islamic Revolutionary Guard Corps.
On the flip side, Iranian officials have reiterated that they are “fully prepared” to respond to US sanctions targeting Tehran and its allies.
“Apparently, (the US) have now decided to try another failure. We have long been expecting these days and were well aware of the plans they had. The government has a two-year plan and is fully prepared, and has been prepared, for these developments,” Finance Minister Ali Madanizadeh told the state-run Islamic Republic of Iran News Network (IRINN).
Accusing the United States of attempting to “wage economic terrorism” against Iran, he added, “We know how to play this game. This time, they should not think our response will be purely defensive and that we will only defend ourselves. They should also expect us to go on the offensive.”
Iranian Parliament Speaker Bagher Ghalibaf, who was central to the initial US-Iran talks held in Pakistan, hit back at Trump, saying that having been defeated “in the military and political war,” the US “will also be defeated in the economic actions,” according to Iran’s semi-official Tasnim News Agency.
On the contrary, Israeli Prime Minister Benjamin Netanyahu applauded Trump and US Treasury Secretary Scott Bessent following their threatening announcement regarding new sanctions.
Praising the Trump administration, he tweeted online, “Congratulations President @realDonaldTrump and Secretary @SecScottBessent on the latest sanctions against the Iranian regime. You justly exact a steep price from that cruel dictatorship and from those who assist its continued aggression.”
In other news, the United Kingdom Maritime Trade Operations (UKMTO) reported that an oil tanker was hit on Tuesday by an unidentified projectile and disabled about 17 kilometres northeast of Oman’s Ash Shishah, which is located at the Hormuz Strait’s entrance.