Oil prices retreat as markets focus on potential Strait of Hormuz reopening, overshadowing supply risks and weak Chinese demand.
Brent crude fell below $80 per barrel as optimism grew over a possible deal to reopen the Strait of Hormuz, a critical oil chokepoint. The decline reflects market sentiment prioritizing resolution over geopolitical tensions, despite ongoing risks.
Prices have remained subdued despite supply disruptions, supported by weaker-than-expected Chinese oil imports and shifts toward coal-to-chemicals and electrification. Analysts note that weather-related shocks, such as a potential Super El-Nino, could still disrupt markets.
Diplomatic efforts appear to be progressing, with Iran reportedly considering allowing European nations to clear mines from the strait. However, officials caution that no solid agreement has been finalized yet.