Oil prices little changed after Iran says deal reached with Oman to share revenue from Hormuz
Oil fell more than 3% earlier in the session as the U.S. relies on economic pressure against Iran rather than military strikes.
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Oil prices were little changed Wednesday after Iran's hard-line Revolutionary Guard said Tehran has reached a deal with Oman to share control of the Strait of Hormuz.
Iran and Oman have agreed to share revenue generated from Hormuz, a Revolutionary Guard spokesman told the state news agency Tasnim. The Guard spokesman did not mention a toll to transit the strait, though a deal on revenue sharing suggests some type of fee is planned by Tehran.
Brent crude futures, the international benchmark, traded 78 cents lower to $87.80 a barrel. U.S. West Texas Intermediate crude lost 13 cents to settle at $82.23 per barrel.
Ships would enter the Persian Gulf through Iranian waters under the agreement, said Iran's Deputy Foreign Minister Kazem Gharibabadi. They would exit through a joint corridor that crosses the territorial waters of Oman and Iran, Gharibabadi said, according to Tasnim.
It's unclear whether the U.S. would sign off on Iran jointly managing Hormuz, said Helima Croft, head of global commodity strategy at RBC Capital Markets. And Gulf nations that have been attacked by Iran during the war are not going to pay Tehran to ship oil through the strait, Croft told CNBC.
Oil fell more than 3% earlier in the session as the U.S. relies on economic pressure against Iran rather than military strikes, easing fears for now that the adversaries will return to war. Prices are down more than 5% for the week.
The Revolutionary Guard said the U.S. has tried to obstruct a deal between Iran and Oman. Washington must accept the agreement for Hormuz to reopen, the spokesman said.
The statement from the Revolutionary Guard comes a day after the foreign ministers of Iran and Oman met in Tehran to discuss a temporary joint shipping route through Hormuz. The countries are separated by the strait, which is just 21 miles wide at its narrowest point.
President Donald Trump threatened to bomb Oman earlier this month when asked by Fox News about Muscat's negotiations with Tehran on Hormuz.
Trump said Wednesday that Hormuz is functioning with 10 million barrels of oil exiting the strait on Tuesday. "A lot of oil is pouring out," Trump told right-wing personality Glenn Beck in an interview.
Trump has repeatedly claimed the U.S. controls Hormuz as the military helps ferry tankers through the strait along Oman's coast. U.S. Central Command told CNBC last week that 660 million barrels of crude oil have exited Hormuz since May under military protection.
