Oil slumps as Iran and Oman weigh shared Hormuz corridor

Brent crude’s price has moved lower following news that Iran and Oman are restarting talks about joint control of the Strait of Hormuz.

IMAGE: Strait of Hormuz. Getty Images

Oil prices have plunged following the announcement as traders interpret the move as a potential step towards reviving commercial shipping through the vital chokepoint.

Both countries have recently engaged in constructive talks focused on the resumption of safe navigation through the Strait of Hormuz “while preserving their sovereignty and sovereign rights”, they said in a joint statement.

Tehran and Muscat have proposed a framework that establishes a joint, temporary navigational corridor through the Strait of Hormuz, and implement a joint project to clear the region of mines, the statement read.

“Oil prices remain under downward pressure as Iran and Oman talks on the Strait of Hormuz move forward, and Pakistan signals some progress in talks with Iran to end the Middle East war,” two analysts from ING Bank said.

Despite the positive talks, Tehran warned yesterday that the strait will remain closed unless Washington ends the conflict, Al Jazeera reported.  

Eleven inbound and six outbound transits were made yesterday, market intelligence provider Windward reported. Of this, seven vessels moved in dark mode, the data also showed.

Yesterday's increased vessel traffic, at 17 transits, follows a meagre four the day before. Despite the overnight uptick, activity remains a fraction of pre-war averages of 140 daily transits.

Two tankers carrying liquefied petroleum gas (LPG) transited the waterway outbound, while two empty vessels moved inbound from the Gulf of Oman into the Persian Gulf, Reuters reported citing data from Kpler.

US keeps its blockade of Iranian ports in place

The movement of commercial ships in and out of Iranian ports remain largely suppressed due to Washington’s ongoing blockade of the region.

As of Sunday, the US Central Command (CENTCOM) said it has redirected 71 commercial vessels, disabled three, and boarded two to prevent ships from entering or departing Iranian ports, it said on social media platform X.

Only six vessels were observed loading cargo at Kharg Island over the past 30 days, with four disabling their AIS tracking transmitters while loading, “matching the island's sustained dark-fleet loading pattern”, Windward reported.

“Combined lifted volume across the five quantifiable calls is assessed at roughly 4.65 million barrels of crude and products,” Windward said, adding all vessels were bound for China or the UAE.

By Aparupa Mazumder

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