Oil prices further went down on Thursday after a report said Saudi Arabia and Kuwait lifted restrictions on the United States’ use of their airspace and military bases, allowing America to restart operations to escort commercial ships through the Strait of Hormuz as early as this week.
Brent crude futures gave up 1.2 per cent or $1.21 to trade at $100.06 a barrel, while the US West Texas Intermediate (WTI) crude futures depreciated by 0.28 per cent or 27 cents to $94.81 per barrel.
The Wall Street Journal reported that Saudi Arabia and Kuwait had lifted restrictions on the US military’s use of their airspace and military bases, citing American and Saudi officials, and that the Donald Trump administration was looking to restart ‘Project Freedom’, its operation to guide vessels through the vital Strait of Hormuz waterway this week.
The US and Iran are edging toward a limited, temporary agreement to halt their war, with a draft framework that would stop the fighting but leave the most contentious issues unresolved and centre on a short-term memorandum rather than a comprehensive peace deal.
The US has sent a proposal for a one-page memorandum that could lead to a gradual re-opening of the Strait of Hormuz and the lifting of the US blockade on access to Iranian ports. Iran has yet to review and respond to the proposal.
No agreement has been reached on fresh mediated talks, including on Iran’s nuclear programme.
Market analysts noted that a confirmed deal would probably take Brent back into the $80-$90 price range quickly, but a breakdown in talks or if strikes resumed, it would immediately push prices north of $120 a barrel.
On the supply front, the US government said Iran appears to have cut back oil production by 400,000 barrels per day and is likely to reduce it further as its storage units fill.
Meanwhile, a Chinese-owned oil products tanker was attacked near the Strait of Hormuz on Monday, marking the first time a Chinese oil vessel has been attacked.
US Treasury Secretary Scott Bessent had earlier urged China to intensify its diplomatic efforts to persuade Iran to open the Strait of Hormuz to international shipping, adding that President Trump and his Chinese counterpart, Mr Xi Jinping, will discuss the subject when they meet next week.
