Brent price falls as Hormuz Strait tensions ease

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Brent price falls

Highlights

Brent crude futures fell 1.20%, while WTI crude futures declined 1.22%.
U.S.-Iran talks eased fears of Middle East supply disruptions.
The Strait of Hormuz remains the main risk for oil markets.

Diplomacy weighs on the risk premium

Brent crude futures for September delivery traded at $70.71 a barrel, down $0.86, or 1.20%. West Texas Intermediate futures for August delivery fell to $67.74 a barrel, down $0.84, or 1.22%. The latest drop came after U.S. President Donald Trump said negotiations with Iran in Qatar were “going well,” adding that discussions over Iran’s nuclear program were moving in the right direction, according to CNBC.

Qatar said the discussions produced positive progress on issues tied to an interim agreement reached in June. The main topics of the talks were maritime shipping through the Strait of Hormuz and the possible unfreezing of Iranian funds, rather than Iran’s nuclear program.

The Strait of Hormuz remains central to the oil market’s reaction. Any threat to traffic there can quickly lift crude prices, while signs of resumed flows tend to pull the risk premium lower. Recent reports have pointed to recovering traffic through the strait and easing fears of a wider disruption.

Prices retreat after a volatile quarter

The latest decline deepens a sharp reversal in crude prices this quarter. Brent has posted its weakest quarterly performance since 2020, while WTI has also moved lower as traders price in a smaller chance of an immediate supply shock.

Still, the market is not treating the diplomatic process as settled. The latest round of talks ended without a clear breakthrough toward a lasting peace agreement. Iran continues to seek recognition of its control over the Strait of Hormuz, while U.S. officials have said nuclear issues will be addressed later.

Supply risk is still the main price driver

The latest move matters because oil prices are being driven less by demand data and more by geopolitical risk. A stable Strait of Hormuz could keep pressure on prices, especially if supply continues to recover and traders reduce conflict-related hedges.

But the risk has not disappeared. The waterway carries a major share of global energy trade, and recent attacks on commercial vessels showed how quickly sentiment can shift. For now, the market is treating diplomacy as a reason to sell, but any breakdown in talks could quickly bring the Middle East risk premium back into crude prices.

We also reported IEA warns of weaker oil demand and supply surplus by 2027.

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