Market Reaction
Oil prices surged on Thursday after a media report indicated that a framework agreement on the Strait of Hormuz would bar U.S., Israeli and other hostile vessels until compensation is paid. At 13:03 ET (16:38 GMT), Brent crude futures for October climbed 4% to $82.66 a barrel, while U.S. West Texas Intermediate (WTI) futures for September rose 3.3% to $77.73 a barrel. Despite the sharp intraday gains, both contracts remained on track for steep weekly losses.
Hormuz Framework Details
Iran and Oman have been negotiating a management plan for the strait, which carries roughly one‑fifth of global oil and gas supplies. Iran’s Fars News Agency reported that the initial text of the plan was under parliamentary review, citing parliament member Alireza Salimi. The draft stipulates that passage of U.S., Israeli and other hostile vessels would be prohibited until compensation is received. Entry would initially be through a northern corridor adjacent to the Iranian coast and exit via a southern corridor near Oman. After a specified deadline, transit through both corridors would cease, with traffic redirected through a centrally‑located corridor that Iran would manage for entry and jointly with Oman for exit. The report suggested that such provisions would likely be unacceptable to Washington.
Political Commentary
President Donald Trump earlier in the week said he had called off a planned attack on Iran because of progress toward a deal, while warning that the United States remained “ready to go” if an agreement was not reached. When asked what made him think the situation was different, Trump replied, “It may be, it may not be,” adding that the U.S. knows when it is ready to act. Deutsche Bank’s Jim Reid noted that markets have witnessed many false dawns during the conflict and that attention is shifting from whether a deal can be reached to the specifics of the final arrangement, including the unresolved issue of whether Iran will be allowed to levy tolls on vessels using the strait.
U.S. Inventory Data
Investors also processed data showing that U.S. crude oil inventories unexpectedly increased by about 2.5 million barrels last week, contrary to market expectations of a 1.5 million‑barrel drawdown, indicating softer near‑term demand. At the same time, refined fuel stocks tightened, with gasoline inventories falling by 1.64 million barrels and distillate inventories declining by 3.47 million barrels.