Global oil prices traded lower on Wednesday as markets awaited a crucial decision from Iran's Supreme Leader, Ayatollah Ali Khamenei, on a proposed agreement that could reopen the Strait of Hormuz, one of the world's most important oil shipping routes. The prospect of restoring tanker movements through the strategic waterway eased immediate supply concerns, although persistent attacks on commercial vessels continued to keep geopolitical risks firmly in focus.
As at the time of writing 9:16 p.m. (WAT), Brent crude traded at $79.53 per barrel, up 0.21%, while West Texas Intermediate (WTI) stood at $75.28 per barrel, down 0.65, reflecting cautious optimism that diplomatic efforts could eventually stabilise crude exports from the Gulf.
According to Oilprice.com, Iranian and Omani negotiators have reportedly completed a draft agreement designed to restore shipping through the Strait of Hormuz after months of disruption caused by the U.S.-Iran conflict. The proposed arrangement is now awaiting the approval of Iran's Supreme Leader, whose decision could determine whether one of the world's busiest energy corridors resumes normal operations.
The draft agreement reportedly proposes a temporary shipping framework under which vessels entering the Persian Gulf would transit through Iranian-controlled waters, while outbound traffic would use routes administered by Oman. The arrangement would revive elements of the U.S.-Iran memorandum reached in June before renewed attacks on commercial shipping caused negotiations to collapse.
Despite progress in negotiations, disagreements over transit fees remain a major obstacle. Reports indicate that Tehran is demanding payments equivalent to between 5% and 7% of cargo value for vessels using the route, while Oman has proposed a lower 3% charge. The United States has rejected any arrangement requiring shipping companies to pay Iran for passage through what had historically been regarded as an international waterway.
Shipping activity through the Strait of Hormuz remains severely constrained. Data from Kpler showed that only eight vessels crossed the strait on Tuesday, a sharp decline from the 130 to 140 daily transits recorded before the conflict erupted on February 28. The collapse in tanker traffic has continued to disrupt crude and liquefied natural gas exports from the Gulf, tightening global supply chains.
Security concerns also remain elevated despite diplomatic efforts. The Houthis claimed responsibility for firing ballistic missiles at the Saudi tanker Wafa near the Red Sea port of Yanbu, while an Indian-flagged vessel reportedly sank off Yemen after being struck by an explosive-laden boat. Another cargo ship also reported being hit near Oman's Al Khasab port within the Strait of Hormuz, highlighting the continuing risks facing commercial shipping.
Oilprice.com noted that crude prices initially weakened on expectations that a breakthrough in negotiations could restore Gulf exports, before recovering some lost ground as fresh attacks on regional shipping reminded traders that supply risks remain far from resolved. The market continues to weigh the possibility of a diplomatic breakthrough against the likelihood of further military escalation.
Market participants are expected to closely monitor Tehran's decision over the coming days, as any approval of the draft agreement could significantly improve tanker movements through the Strait of Hormuz and ease supply disruptions. However, continued security incidents across the Gulf and the Red Sea suggest that volatility is likely to remain a defining feature of global oil markets in the near term.