LONDON: Oil prices declined on Thursday as investors assessed diplomatic efforts between Oman and Iran over the Strait of Hormuz, while continued military exchanges between Washington and Tehran kept supply concerns in focus.
Brent crude futures fell $1.42, or 1.56%, to $89.32 a barrel by 1324 GMT after briefly rising to $93.31. US West Texas Intermediate (WTI) crude dropped $1.14, or 1.35%, to $83.32 a barrel after reaching a session high of $85.94.
Analysts said expectations that Oman-Iran discussions could help restore stability around the Strait of Hormuz weighed on prices.
“The fact that Oman is in talks with Iran could suggest that progress is being made on re-opening the Strait of Hormuz,” said Hamad Hussain, a climate and commodities economist at Capital Economics.
Geopolitical risks remained elevated after the US military said it had struck dozens of Islamic Revolutionary Guard Corps (IRGC) targets in Iran following Tehran’s launch of ballistic missiles at American forces in the region.
Market concerns were further heightened after Egypt’s cabinet confirmed that a drone attack caused a fire that engulfed two gas vessels at the Mediterranean port of Damietta, ruling out an accidental cause.
“Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere — hope for diplomacy is welcome, but the market is pricing in the reality of ongoing strikes,” said Tim Waterer, chief market analyst at KCM Trade.
Strait of Hormuz handles around one-fifth of global oil
The Strait of Hormuz, a crucial energy route that normally handles around one-fifth of global oil and liquefied natural gas shipments, has remained at the centre of market concerns since the Iran war began on February 28.
Investors are closely monitoring oil flows through key maritime chokepoints, including Hormuz and the Bab el-Mandeb strait at the southern end of the Red Sea, while also watching for signs of diplomatic progress.
Supply concerns were compounded after tankers scheduled to load crude from the Caspian Pipeline Consortium (CPC) terminal began moving away from the Black Sea following an incident in which a vessel was hit during loading operations, according to two sources and shipping data.
Meanwhile, a Ukrainian drone strike caused a fire at Lukoil’s Perm refinery in Russia, damaging and forcing the shutdown of one of its crude distillation units, industry sources said.
Pakistan says US-Iran negotiations continue
Pakistan said on Thursday that negotiations between the United States and Iran remained underway despite a sharp escalation in hostilities, with Washington launching what it described as a “heavy wave of strikes” against Iranian targets following fresh attacks targeting Jordan.
“Let me add that the negotiations between parties are ongoing to normalise the situation, particularly the situation in the Strait of Hormuz, as well as to de-escalate,” Foreign Office spokesman Tahir Andrabi told reporters in Islamabad.
Also Read: Pakistan Says US-Iran Negotiations Continue Despite Fresh Military Escalation
The remarks came as the United States and Iran exchanged fresh military strikes, raising fears of a wider regional conflict and renewed disruption to one of the world’s most important energy corridors.
Hussain warned that continued disruptions to major shipping routes, combined with rapidly declining oil inventories, could push prices significantly higher despite Thursday’s decline.
Pakistan reaffirms mediator role
Pakistan says it continues to play an active diplomatic role aimed at bringing both sides back to negotiations after helping broker the Islamabad Memorandum of Understanding (MoU), signed in June to end hostilities and lay the foundation for a permanent peace agreement.
Andrabi urged both the US and Iran to exercise “maximum restraint and fully adhere to their commitment to resume technical-level talks” in line with the Islamabad MoU and the Pakistan-Qatar joint statement.
Fighting Intensifies
The latest diplomatic efforts come as military confrontation has intensified once again.
U.S. Sailors monitor F/A-18E Super Hornet fighter jets launching from the USS George H.W. Bush (CVN 77) while sailing in the Arabian Sea. pic.twitter.com/l5XFbEf5v7
— U.S. Central Command (@CENTCOM) July 30, 2026
Earlier on Thursday, the US Central Command (CENTCOM) said American forces had “successfully completed a heavy wave of strikes against Iran”, targeting dozens of Revolutionary Guard facilities, including military command centres.
Also Read: US Launches Heavy Strikes on Iran as Middle East Conflict Escalates
US President Donald Trump had earlier vowed to hit Iran “hard” following Tehran’s latest attack on Jordan.
