Crude oil prices extended their decline for the fourth day today on news that Qatar’s Prime Minister will visit Tehran today to discuss the possibility of reopening the Strait of Hormuz.
At the time of writing, Brent crude was trading at $87.46 per barrel, with West Texas Intermediate at $81.83 per barrel, despite a new report about a strike on a tanker in Hormuz.
No details about the visit by Sheikh Mohammed bin Abdulrahman al-Thani to Tehran were made public besides a statement from Iran’s Foreign Ministry spokesman Esmaeil Baghaei that said the discussions would focus on Qatar’s continued role as a mediator between the warring parties and the latest developments in and around Hormuz.
Reuters also cited a statement by Qatar’s Foreign Ministry spokesperson who said the talks would involve freedom of navigation in the chokepoint and the possibility of its reopening, as well as ways to “de-escalate tensions and create the conditions conducive to dialogue.”
For now, open hostilities are on pause as the United States decided to try economic pressure by means of new sanctions targeting Iran’s oil industry as well as other vital sectors of its economy in a bid to force Tehran to reopen Hormuz. Iran, for its part, responded with a black list of 45 tankers it said would be fair targets in the waterway if they violate the rules Iran set earlier this year for navigation of Hormuz.
Peace appears to be no closer than it was a month ago, but oil traders are optimistic despite the Iranian tanker black list and reports about tankers getting hit by projectiles in the waterway. One reason is reports about progress on peace talks coming from Pakistani sources. Another appears to be the ongoing talks between Iran and Oman on joint management of the Strait of Hormuz, even though such joint management would not automatically mean a reopening of the strait.
“Any agreement between these two parties does not mean we will see normalisation in oil flows through the key chokepoint,” ING commodity analysts wrote on Thursday. “We would likely need to see the US lift its blockade on Iranian ports and ease sanctions on Iran before we see any move towards normalization,” they added.
By Irina Slav for Oilprice.com
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