Oil edges higher as markets await outcome of Iran-Oman talks

Oil prices rose during Thursday's trading session as investors remained cautious over whether ongoing talks between Iran and Oman would ultimately restore shipping through the Strait of Hormuz, while reports of attacks targeting Saudi oil tankers in the Red Sea and the Gulf of Aden renewed concerns over global supply security.

In trading, Brent crude futures gained 1.1% to $80.31 per barrel by 12:31 GMT, while US West Texas Intermediate (WTI) crude futures rose 1.0% to $75.95 per barrel.

Shared understanding

Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Wednesday that Iran and Oman had reached an understanding on the geographical coordinates of a shipping route through the Strait of Hormuz, adding that a joint announcement was being prepared, provided no outside parties intervened.

Under the proposed agreement between Iran and Oman to resolve the dispute between the United States and Iran, Tehran would assume control over vessels entering the Gulf through the Strait of Hormuz, marking one of the most significant concessions offered to Iran so far.

Before the conflict erupted in late February, roughly 20% of global daily oil and liquefied natural gas supplies passed through the strategic waterway.

Geopolitical risks remain

Shipping data showed that Gulf crude oil and condensate exports remained broadly stable during July, although they were still around 40% below pre-war levels.

Meanwhile, Iran warned Gulf states that any new US attack on its territory would be met with strikes targeting critical regional energy infrastructure, according to five sources, as Tehran seeks to raise the cost of any military action by threatening Washington's regional allies.

Iran-aligned Houthi forces in Yemen said on Wednesday that they had launched a missile attack on a Saudi oil tanker off the port of Yanbu on the Red Sea, in addition to another attack targeting a Saudi tanker in the Gulf of Aden. Saudi Arabia has not officially confirmed either incident.

In a separate development, a document reviewed by Reuters showed that Saudi Arabia has slightly reduced the official selling price of its flagship Arab Light crude for September shipments to Asian buyers.