Crude Oil Plunges, US-Iran Send Positive Signals, Strait of Hormuz Free Passage Agreement May Be Reached Soon

August 5th, U.S. Treasury Secretary Janet Yellen stated that the U.S. and Iran may reach an agreement in the next one or two days to reopen the Strait of Hormuz and restore "freedom of navigation." Previously, U.S. President Trump had a phone call with Qatari Emir Sheikh Tamim, discussing efforts to de-escalate tensions between the U.S. and Iran.

According to Xinhua News Agency, Iranian Foreign Ministry spokesperson Baghaei announced on the 4th that Iran is still in negotiations with Oman on the issue of the Strait of Hormuz, and the two sides have made "positive progress" at both the technical and political levels. The negotiations focus on determining safe shipping lanes and establishing relevant mechanisms to manage strait navigation.

Expectations of diplomatic breakthroughs have risen, leading to a sharp decline in international oil prices. Brent crude oil futures fell by nearly 6% on the same day, settling below $80 per barrel, currently priced at $78.52 per barrel; U.S. crude oil futures dropped over 6%, falling below $76 per barrel, currently priced at $74.28 per barrel.

U.S. Secretary of State Mike Pompeo stated that the relevant negotiations have made progress but have not been finalized yet, with the U.S. hoping to reach an agreement "soon." Yellen mentioned that once the strait resumes navigation, prices of commodities such as energy, fertilizers, and refined oil may further decrease.

However, the current arrangements have not yet been formalized. Previously, the U.S. and Iran had reached a temporary arrangement to restore Hormuz shipping, but it ultimately fell through due to route and security issues. Analysts believe that even if a new agreement is reached, it does not mean the end of the U.S.-Iran conflict, and there still remains a risk of further escalation.