West Texas Intermediate crude falls by nearly seven-tenths of a percentage point, while Brent falls by half a percentage point, following losses exceeding 5 per cent yesterday.
The drop in crude prices comes amid the revival of the diplomatic path and the narrative of negotiations during the intermittent war in the Middle East.
Reports and statements were published about nearing an agreement that would ease obstacles for ships passing through the Strait of Hormuz.
The Qatari Foreign Ministry stated that progress has been made in negotiations to reach an agreement to reopen the strait.
The Iranian Foreign Ministry spokesman also said that talks with Oman regarding the strait were positive and are continuing in order to secure ship transit routes. Furthermore, regional sources told Axios that Iran and Oman are on the verge of reaching an interim agreement lasting up to 60 days, renewable, to reopen the strait.
I cannot deny the existence of diplomatic momentum, in light of multi-sourced reports and statements, even though I am always sceptical about the credibility of all war parties regarding making concessions on core issues. However, this doubt persists in light of a combination of factors.
The Wall Street Journal reported that the Iranian leadership’s calculations are based on establishing a red line: dominance over the Strait of Hormuz is non-negotiable. This is because through it, Iran can put direct pressure on the US economy and prevent further military strikes from the United States and Israel, as rising fuel prices would push Donald Trump to make concessions and accept Iranian terms ahead of the midterm elections, according to the newspaper. Add to that, the absence of a military resolution, or even a diplomatic one represented by Iran’s complete surrender, will pose a major challenge for Prime Minister Benjamin Netanyahu, who will enter crucial elections late next October, at a time when he has been unable to achieve total victory in Lebanon or Gaza.
At best, right now, the diplomatic path would return the United States and Iran to negotiating the implementation of the memorandum of understanding, which was met with widespread criticism domestically in the US when announced in June, let alone in Israel, given the size of the concessions granted to Iran, which Iran in turn insists on heavily. Therefore, if the parties continue sticking to their maximalist demands, we could return to an atmosphere of intermittent escalation, and we may remain stuck in the grey state of no peace and no war.
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