Oil posts steepest weekly loss in months on US-Iran talks

Oil prices recorded their steepest weekly decline in months, falling over 9% as renewed diplomatic activity between the United States and Iran raised hopes for reopening the Strait of Hormuz, while fresh supply increases from OPEC+ and rising US crude inventories added further downward pressure.

Brent crude traded at $81.81 per barrel on Friday, down 9.21% from the prior week's close of $90.11, while West Texas Intermediate fell 9.4% to $76.71 from $84.67, according to Anadolu Agency.aa

Diplomatic Progress Deflates Risk Premium

The selloff was triggered by growing optimism over US-Iran negotiations centered on the Strait of Hormuz, through which roughly a fifth of the world's oil passes. President Donald Trump said earlier this week that talks had resumed and were making progress, with Qatar reporting that mediators were advancing efforts to end the conflict.reuters

Iran, Oman, and the US appear to be edging closer to an interim agreement that could reopen the strait, according to Al Jazeera. Under a proposal reported by Axios, ships entering the Gulf would use a northern lane through Iranian waters while vessels leaving would travel through a southern lane in Omani waters, with an initial 60-day period during which no transit fees would be charged.aljazeera

Iranian Deputy Foreign Minister Kazem Gharibabadi said an agreement with Oman on future shipping arrangements was nearing completion. However, Iran's foreign ministry has simultaneously insisted it is not negotiating directly with the US, and Tehran's parliament has been reviewing legislation that could restrict passage of vessels from countries it considers hostile.aa+1

Supply Pressures Mount

Beyond diplomacy, OPEC+ approved an increase of 188,000 barrels per day for September, completing the phased rollback of voluntary production cuts introduced in 2023. Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman agreed to the adjustment during a virtual meeting on August 2. This marks the sixth consecutive monthly increase this year.oilprice+2

US crude inventories also unexpectedly rose by approximately 2.5 million barrels, defying forecasts for a decline and signaling looser near-term market conditions.aa

Outlook Remains Uncertain

Despite the broad selloff, oil prices trimmed some losses later in the week as lingering uncertainty over the Strait of Hormuz prevented a steeper decline. Brent crude gained over 4.5% by Thursday evening, though prices remain nearly $20 per barrel below their July 23 peak above $100.oilprice

The International Energy Agency has revised global oil demand for 2026 downward by roughly 1.1 million barrels per day, citing demand destruction from months of elevated prices and shipping disruptions. The US Energy Information Administration expects ongoing inventory accumulation, with Brent averaging $74 per barrel in the third quarter.eia+1