Oil Extends Two-Day Drop on Signs of Progress Toward Hormuz Deal

An oil pumpjack at the Inglewood Oil Field in Culver City, California, US, on Monday, May 4, 2026. With the US-Iran war creeping into its third month, oil traders are hedging against divergent outcomes tied to US inventories as the newly anointed top crude exporter faces unprecedented pressure to meet global demand. Photographer: Kyle Grillot/Bloomberg Photo by Kyle Grillot /Bloomberg

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(Bloomberg) — Oil fell for a third day on optimism a deal can be reached that would reopen the Strait of Hormuz, freeing up supply trapped in the Persian Gulf.

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West Texas Intermediate declined toward $75 a barrel, after losing more than 10% in the prior two sessions, while Brent closed below $80 for the first time in more than three weeks. Qatar said an interim proposal had been drafted and both Washington and Tehran signaled progress in talks to reopen the waterway on Tuesday.

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Oil prices have slumped over the past two weeks as US President Donald Trump said he postponed new strikes on Iran to give talks more time. Even if a short-term deal to normalize commercial shipping in the strait is reached, it might still fail to end the war conclusively or resolve Trump’s concerns about Iran’s nuclear program.

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“Now that passions have cooled somewhat, perhaps there is a chance a deal can be agreed to,” said Robert Yawger, director of energy futures division at Mizuho Securities USA LLC. “I still expect a bad deal to ultimately get done, which will allow the US to declare some kind of victory, but leave a lot of loose ends, including the nuclear deal.”

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The previous US-Iran ceasefire lasted less than a month before collapsing over Hormuz. That helped drive a roughly $32 swing in Brent last month as the conflict reignited and spread to the Red Sea, before another pause in late July to allow diplomatic efforts to continue was shattered.

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Trump discussed efforts to deescalate US-Iran tensions with Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani in a call on Tuesday, according to the Gulf state’s government. A White House official confirmed the call without offering more details. 

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In a sign of potential progress, Iran is considering allowing European nations to remove mines from the strait, according to diplomats familiar with the matter. Separately, the country’s foreign ministry said discussions between Iran and Oman had been positive and centered on safe shipping routes in the waterway, according to state-run IRIB News.

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Meanwhile, Saudi Arabia held talks with Yemen’s Houthi militants through Omani mediators as it seeks to prevent the conflict from widening, according to people familiar with the matter. The OPEC member is continuing to prepare military options should negotiations fail, they said.

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Elsewhere, US crude inventories rose 2.7 million barrels last week while stockpiles at Cushing, Oklahoma — the delivery hub for WTI — increased by 2.4 million barrels. If confirmed by official data later Wednesday, that would be the biggest rise in Cushing since March, and would help push levels back above the 20 million-barrel level widely considered the operational minimum.

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—With assistance from Nicholas Lua.

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