Oil prices continued their decline for a third consecutive session on Wednesday as investors monitored progress regarding initiatives to resolve the U.S.-Iran conflict and restore commercial shipping through the Strait of Hormuz. Brent crude futures experienced a decrease of $1.1, representing a 1.34% decline, settling at $78.30 per barrel. Meanwhile, U.S. West Texas Intermediate crude fell by $1.43, or 2%, to a trading price of $74 per barrel. Brent settled more than 5% lower on Tuesday, continuing Monday’s significant decline following comments from Qatar that raised expectations for a potential agreement in the near future. Prior to the onset of the conflict, approximately 20% of global oil and liquefied natural gas transited through the Strait of Hormuz, coinciding with a 50% increase in oil prices during March alone. In remarks, U.S. Treasury Secretary Scott Bessent indicated that an agreement between Washington and Tehran to reopen the Strait of Hormuz could be achieved as soon as Tuesday or Wednesday. He stated that such a deal would enable commercial vessels to navigate freely through the waterway. U.S. Secretary of State Marco Rubio indicated that the United States is engaged in discussions concerning Iran and Oman. While negotiations were progressing, he observed that no conclusive agreement had been established.

Qatar, acting as a crucial intermediary in the negotiations, indicated that efforts are ongoing to achieve a short-term breakthrough that may facilitate wider discussions between the U.S. and Iran. U.S. President Donald Trump engaged in discussions with Qatari Emir Sheikh Tamim Bin Hamad Al-Thani regarding strategies to mitigate tensions in the region. In a separate development, a report indicated that Iran is contemplating the possibility of permitting European nations to undertake mine removal operations in the Strait of Hormuz. However, this report has not been officially corroborated by Tehran. A key hurdle in the negotiations remains the question of whether Iran will persist in its pursuit of control over the strategic waterway and whether the U.S. will dismiss such a proposal. Trump stated on Monday that negotiations with Tehran had commenced and characterised the present circumstances as Iran’s “last chance” to reach an agreement. Iranian officials, however, asserted that no negotiations with the U.S. were occurring.

The outlook for oil prices remains contingent upon the duration of ongoing supply disruptions. JPMorgan projects that each extra month of disruption may increase Brent crude prices by approximately $7 to $8 per barrel. If the disruption extends to three months, the bank anticipates average monthly Brent prices to approach approximately $114 a barrel. Goldman Sachs has issued a warning that Brent may escalate to $120 a barrel should disruptions to shipping via the Strait of Hormuz, the globe’s critical oil transit corridor, persist. Goldman Sachs’ base case, notwithstanding the associated risks, posits that tensions in the Middle East will ultimately subside. Under that scenario, the bank anticipates that Brent will average $80 per barrel in the fourth quarter and $75 per barrel in the following year.

However, it indicated that the risks to its forecast remain tilted towards the upside, referencing the potential for ongoing disruptions in the Strait of Hormuz and the Red Sea. The direction of our outlook remains consistent; however, the trajectory and the timeline have experienced adjustments. We still anticipate a decline in oil prices as we approach 2027, driven by three key factors: an increase in supply from outside the conflict zone, with OPEC+ elevating production targets, the UAE achieving record output, and non-OPEC production responding positively to price movements, stated Anindya Banerjee.