Hormuz Developments Reverse Part of Oil’s Decline

Oil prices rebounded from Wednesday’s session lows after Iran’s Revolutionary Guard said Tehran had reached an agreement with Oman to share revenue generated from the Strait of Hormuz. The announcement introduced a new variable into an already volatile energy market, where traders are closely monitoring developments around one of the world’s most strategically important oil shipping routes.

Brent crude was trading about 1% lower at $87.74 a barrel, while West Texas Intermediate fell 0.7% to $81.74. The recovery followed an earlier decline of more than 3%, leaving both benchmarks down more than 5% for the week. The price action suggests traders are reassessing the immediate risk of a renewed military confrontation rather than abandoning the broader geopolitical risk premium altogether.

Revenue Sharing Raises Questions Over Shipping Access

The Revolutionary Guard said Iran and Oman had agreed to share control and revenue associated with Hormuz, although the spokesman did not specify whether a formal transit toll would be imposed. The prospect of revenue sharing nevertheless suggests that Tehran may be considering an economic mechanism connected to the movement of vessels through the strait.

Hormuz is only about 21 miles wide at its narrowest point and remains critical to global energy flows. Any arrangement that improves the prospects for regular shipping could reduce fears of a prolonged supply disruption and place downward pressure on crude prices. However, the Guard also said Washington would need to accept the agreement before Hormuz could reopen, leaving a significant political obstacle unresolved.

U.S. Policy Remains a Critical Market Variable

The latest statement follows a meeting between the Iranian and Omani foreign ministers in Tehran on Tuesday, where the two sides discussed a temporary joint shipping route through Hormuz. The diplomatic engagement comes as Washington has shifted toward economic pressure on Iran rather than immediately returning to large-scale military action, helping reduce some of the most severe supply-disruption fears priced into crude earlier.

The United States remains directly involved in the security situation. U.S. Central Command has said approximately 660 million barrels of crude have exited Hormuz since May under military protection. Iran’s claim that the United States attempted to obstruct an agreement with Oman therefore adds another layer of uncertainty over whether the proposed arrangement can translate into a sustainable reopening of commercial shipping.

Outlook

The next direction for oil prices will depend heavily on whether the Iran-Oman arrangement develops into a workable framework for tanker traffic. A credible reopening could accelerate the recent decline in geopolitical risk premiums, while disagreement over control, fees or U.S. involvement could quickly restore upward pressure. With Brent already down more than 5% this week, traders are likely to remain highly sensitive to every development surrounding Hormuz, making diplomatic progress as important to crude markets as changes in physical supply.