Oil benchmarks fell sharply after Iran and Oman announced plans for a joint maritime corridor in the critical Strait of Hormuz.
Brent crude plunged 3.9% to $88.58 a barrel on Aug. 25 after Iran and Oman revealed plans to establish a temporary joint maritime corridor in the Strait of Hormuz. The announcement included a proposal to clear mines from the key waterway, which handles about 20% of global oil flows.
Prior to the drop, Brent had declined 6.2% since Aug. 21, while U.S. light sweet crude fell 5.4% to $82.36. Murban crude, a benchmark from Abu Dhabi, saw an even steeper 8.6% decline to $92.71. The talks between Iran and Oman do not guarantee immediate implementation but signaled potential easing of tensions.
Equities broadly rose on the news, though energy stocks underperformed, with the Energy Select Sector SPDR ETF (XLE) falling 1.7%. Reports suggested U.S. economic pressure on Iran may shift toward negotiations rather than escalation.