Oil prices experienced a decline in early trading on Thursday following Qatar’s announcement that indirect discussions between Iran and the U.S. had achieved “positive progress” during the negotiations held in Doha, which wrapped up on Wednesday. The discussions centred on the Strait of Hormuz, which is responsible for one-fifth of the global oil supply. Brent crude futures decreased by 80 cents, representing a decline of 1.09%, settling at $70.80 per barrel. Meanwhile, U.S. West Texas Intermediate crude saw a reduction of 90 cents, or 1.28%, bringing it down to $67.75 per barrel. In the previous session, both benchmarks experienced a decline exceeding 1%, concluding at their lowest points in four months.

Sources indicated that negotiators from the U.S. and Iran engaged in discussions over a two-day period in Doha, focusing on maritime traffic in the Strait of Hormuz and the unfreezing of Iran’s financial assets. Despite a partial resumption of shipping traffic, tensions escalated over the weekend as the two nations engaged in reciprocal strikes following Iran’s assault on a cargo vessel. Iran is pursuing international acknowledgement of its dominion over the Strait of Hormuz, even if it necessitates the use of force, sources indicate. Tehran has consistently indicated that it will commence toll charges on vessels starting in mid-August, following the conclusion of the toll-free period established by the initial agreement.

Tanker movement through the strait has begun to show signs of improvement, as U.S. Vice President JD Vance indicated that oil flows have reverted to pre-war levels, though specific figures were not disclosed. Experts indicate that, despite the improvement, a full reopening of the Strait of Hormuz is anticipated to require time. Coordination of vessel movements, the resumption of oil well operations, the repair of damaged infrastructure, and the establishment of agreements regarding de-mining operations will be necessary. Some shipowners continue to exercise caution regarding operations in the strait and the broader Persian Gulf.

Analysts indicated that global oil inventories have been diminished due to the extended interruption of shipping via the Strait of Hormuz, and a considerable period will be required to restore them. They noted that stockpiles may persist in their decline prior to the arrival of supplementary supplies from the Gulf into international markets. Last month, Saudi Aramco Chief Executive Officer Amin Nasser cautioned that disruptions in the Strait of Hormuz might postpone the restoration of stability to global oil markets until 2027. He stated that extended disruptions could impact almost 100 million barrels of oil supply on a weekly basis. Saudi Aramco stands as the preeminent oil producer globally.