Oil extends steep selloff on hopes for Hormuz deal

Oil prices extended a steep weekly selloff on Wednesday, with Brent crude falling below $79 a barrel as investors grew hopeful that diplomatic efforts could reopen the Strait of Hormuz and ease the supply disruptions caused by the U.S.-Iran war.

Brent crude futures dropped about 1.2% to $78.44 a barrel in early Asian trading on Wednesday, having already tumbled more than 12% for the week, according to Reuters. U.S. West Texas Intermediate fell 1.4% to $74.70 a barrel, down more than 11% over the same period.shafaq

Diplomatic Signals Drive Selloff

The decline accelerated on Tuesday after U.S. Treasury Secretary Scott Bessent told CNBC that a deal with Iran to reopen the strait could come "as soon as Tuesday or Wednesday," adding that he had seen "quite a few" ships exiting the waterway. Qatar's Foreign Ministry spokesperson Majed Al Ansari said mediators including Qatar, Pakistan, and Oman were coordinating closely to facilitate negotiations and exchange draft proposals between the two sides.energynow+1

Iran and Oman have also made progress toward an arrangement under which ships would enter the Persian Gulf through an Iranian-controlled route and exit through an Omani-controlled route, with service fees charged for security and environmental preservation, according to the Associated Press as cited by the Economic Times.economictimes

Market Remains on Edge

Despite the rapid price decline, analysts warned the pullback could reverse quickly. "If diplomatic efforts fail and physical supply is ultimately affected, the current pullback could prove short-lived, with tighter inventories amplifying the impact of any future supply shock," said Priyanka Sachdeva, head of market insights at Phillip Nova.shafaq

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38% expects Brent to remain in an $80–$90 range until there is either confirmation of a deal or a further escalation in hostilities. The strait normally carries about 20% of the world's oil and liquefied natural gas shipments, and its disruption since late February sent prices surging — with a 50% increase in March alone.energynow+2

Strait Remains Dangerous

Even as talks advance, the waterway remains hazardous. The UK Maritime Trade Operations agency flagged an incident on Tuesday involving a cargo vessel hit by an unknown projectile northeast of Oman's Al Khasab. Six Saudi-flagged supertankers recently diverted toward southern Africa rather than transiting the strait. Iran's Foreign Ministry has denied that direct negotiations with Washington are taking place, though Qatar indicated mediators were making progress.reuters+2