Iran has reportedly offered to reopen the Strait of Hormuz within seven days if the United States eases military pressure, pulling oil prices below $100 a barrel. The signal of renewed diplomacy comes as Houthi rebels tighten their grip on Yemen's Red Sea coast and a drone strike forces Saudi Arabia to shut a key export pipeline.
Oil prices dropped below $100 a barrel after Iran signaled it could reopen the Strait of Hormuz within seven days if Washington eases military pressure and lifts its blockade on Iranian ports. Reuters and Japan's Kyodo news agency, citing an unnamed senior Iranian official, reported the offer, though CNBC said it could not independently verify the reports.
Crude reverses course on diplomacy hopes
Brent crude futures with November expiry traded 2.6% lower at $97.73 a barrel. WTI futures with October expiry fell 3.1% to $92.40. Oil later touched a new low of $97.50 a barrel, though that remains some way above Brent's pre-Iran war levels of around $72 a barrel.
According to Kyodo: "There is a possibility of moving toward an agreement." The official added that Washington must still show seriousness and commitment for diplomacy to advance. The reports landed just before President Trump addresses the United Nations General Assembly, and as Treasury Secretary Scott Bessent threatens to ground Iranian airlines from Wednesday and tighten sanctions on Tehran's financial enablers.
Yemen escalation compounds the risk
Even as the Hormuz offer lifted sentiment, Houthi rebels have seized nearly all of Yemen's Red Sea coastline, tightening their hold on the Bab al-Mandab Strait, a chokepoint that carries around 6% of the world's seaborne-traded crude oil. A drone attack, which Riyadh blamed on a pro-Iranian militia in Iraq, also forced Saudi Arabia to temporarily shut its East-West pipeline, the kingdom's main alternative export route while Hormuz remains disrupted.
Goldman Sachs has warned oil could reach $120 a barrel if the Iran and Yemen conflicts continue. The G7 has separately condemned the Houthis' continued strikes as unacceptable on Yemen and Saudi Arabia, calling on the group to halt attacks on civilian shipping.
Sources: CNBC, The Guardian, OilPrice.com
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