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Oil prices have declined to their lowest levels in three weeks following optimistic signals that negotiations could soon restore shipping through the Strait of Hormuz. US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both indicated that discussions with Iran and Oman have yielded positive momentum, with Bessent suggesting a potential agreement could materialize within days. Brent crude dropped nearly 5% to below $80 per barrel on Tuesday, while US West Texas Intermediate fell more than 5% to $76 a barrel.
The Strait of Hormuz has become a critical flashpoint in ongoing regional tensions, with Iran having restricted most traffic since late February. The waterway typically handles approximately one-fifth of global daily oil and liquefied natural gas supplies. Both the US and Iran have implemented blockades affecting the region, while Yemen’s Houthis have also disrupted alternative shipping routes through the Red Sea, creating widespread supply concerns.
President Trump emphasized that Iran would face severe consequences if the strait does not reopen promptly, while maintaining that productive discussions are underway. Despite the diplomatic progress, previous failed negotiations have created skepticism among market observers about achieving a lasting resolution. The disruptions have already driven fuel prices higher globally, with UK petrol averaging £1.60 per litre and US gasoline prices exceeding $4 per gallon.
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