WTI Crude Falls Below $80 as Hopes Rise for Strait of Hormuz Reopening and US-Iran De-escalation

International oil prices extended their decline on Wednesday, with WTI crude last at $80.01 per barrel, having traded in the $79.50 area at the time of writing, down roughly 9% from last week's high above $87.

**US-Iran Talks Progress Dominate the Tape**

US Secretary of State Rubio said Tuesday that negotiations involving the US, Iran, and Oman on increasing vessel traffic through the Strait of Hormuz have made progress, though a final deal has yet to be reached. Treasury Secretary Bessent earlier said the US and Iran could reach an agreement on reopening the Strait of Hormuz as soon as Tuesday or Wednesday. Qatar also indicated that diplomatic efforts to end the Middle East conflict are ongoing. In response, Brent crude fell 5.3% on Tuesday to settle at $79.36 per barrel, while WTI dropped 5.7% to $75.77, with both hitting three-week lows.

**Geopolitical Premium Rapidly Cooling**

Massabni, head of business development at XS.com, said oil prices have included a considerable geopolitical risk premium since the US resumed airstrikes on Iran last month, and current market expectations for a diplomatic solution are gradually eroding that premium. He believes that if US-Iran talks yield tangible progress, there remains further room for the risk premium in oil prices to decline.

**Institutions Divided on Outlook**

Goldman Sachs sees near-term risks skewed to the upside but still points to supply loosening and price declines over the medium to long term; if a strait disruption persists into 2027, Brent could break above $120 in Q4. Citi, meanwhile, notes that a US-Iran memorandum of understanding is likely to hold, with Strait of Hormuz flows largely normalizing by mid-to-late July; rapid supply return combined with weak demand will push the market into surplus, and current prices have yet to fully reflect the medium-term supply glut, leaving significant downside. Near-term market direction depends on actual progress in US-Iran talks and a reassessment of ceasefire sustainability.