Oil prices fell Wednesday after reports of a draft framework agreement between the U.S. and Iran raised hopes that the Strait of Hormuz could reopen, even as fresh American military strikes threatened to derail the emerging deal.
Brent crude futures dropped more than 3% to around $95 a barrel. By mid-morning in New York, West Texas Intermediate had shed as much as 4.6%, touching $89.55 a barrel.
A draft framework for a memorandum of understanding between Tehran and Washington was the subject of a claim by Iranian state television, which said it had obtained a copy, Reuters reported. According to Reuters, which cited Iranian state television, the document envisions a full return of Hormuz commercial shipping to pre-conflict volumes no later than one month after a deal is signed. A joint Iranian-Omani arrangement would oversee vessel movements through the waterway, while American naval forces would pull back from Iranian waters and end their blockade.
The prospect of restored flows through the strait, a critical chokepoint for global oil and gas, drove prices lower. Recent transits by LNG tankers through the strait have given markets reason to anticipate a broader return to normal shipping activity in the near term.
