Oil prices fell by about two percent on Wednesday, extending losses from the previous session, amid renewed hopes for the reopening of the Strait of Hormuz after Iran announced the resumption of talks with Oman regarding the management of the strategic waterway.
Brent crude futures fell $1.78, or two percent, to $86.80 a barrel by 00:27 GMT. U.S. West Texas Intermediate crude futures dropped $1.49, or 1.8 percent, to $80.87 a barrel, according to Reuters.
Both benchmark crudes had fallen by more than three percent on Tuesday.
“The market continues to react to developments related to shipping through the Strait of Hormuz, and hopes for progress in the talks between Iran and Oman have triggered a sell-off,” said Mitsuru Moraishi, an analyst at Fujitomi Securities.
He added, “However, uncertainty surrounding the outlook has prompted bargain hunting, limiting further losses, and prices are likely to remain range-bound for the time being.”
Iran said it has resumed talks with Oman on managing the Strait of Hormuz.
Iran and Oman have been holding intermittent talks for weeks on managing shipping through the waterway, which carried a fifth of the world’s oil and liquefied natural gas shipments before the start of the Iran-Iraq War in February.
The two countries said on Tuesday that they discussed establishing a “temporary joint shipping lane” through the strait and agreed to clear it of mines.
In the United States, market sources, citing the American Petroleum Institute, said crude oil inventories rose by about 4.2 million barrels in the week ending August 21.
Analysts polled by Reuters had expected crude oil inventories to rise by an average of about 600,000 barrels. Official data from the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is scheduled to be released at 1430 GMT on Wednesday.
