CNBC
U.S. crude oil prices experienced a decline of approximately 5% on Wednesday, following reports indicating that Iran is prepared to reinstate traffic through the Strait of Hormuz in conjunction with a framework agreement with the United States.
By 9:26 a.m. ET, West Texas Intermediate (WTI) futures had decreased by 4.6%, reaching $89.55 per barrel. Simultaneously, the international benchmark Brent oil saw a reduction of 3.73%, settling at $95.87.
According to Reuters, Iranian state television has obtained a draft framework for a memorandum of understanding with the U.S. Tehran has pledged to restore commercial shipping traffic through the Strait of Hormuz to its prewar levels within one month of finalizing the agreement with the United States.
Reports from state television also indicated that Iran intends to manage ship traffic through the Strait of Hormuz in collaboration with Oman. Furthermore, the U.S. military forces are expected to withdraw from the region surrounding Iran and lift the naval blockade, as outlined in the reports.
This week has seen Iran and the United States oscillating between the potential for a deal and the threat of renewed military conflict. The U.S. military conducted airstrikes in southern Iran, which the Pentagon has characterized as defensive in nature. In response, Tehran has vowed to retaliate against these attacks.
Industry experts, however, express caution regarding the prospect of a swift return to normal oil flows. Sultan Ahmed al-Jaber, the head of Abu Dhabi National Oil Company, stated last week that it could take at least four months to increase oil flows to 80% of normal levels, even if the conflict between the U.S. and Iran were to resolve immediately. He projected that full normalization of flows could extend until the first or second quarter of 2027.
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