Oil plunges as US-Iran deal hopes grow, Bessent says Hormuz agreement possible within days

London/Washington: Oil prices fell about 4% on Tuesday after renewed diplomatic signals from the United States and Qatar raised hopes that an agreement could soon be reached with Iran to reopen the Strait of Hormuz and ease disruptions to global energy supplies. US Treasury Secretary Scott Bessent said a deal with Iran could be reached as early as Tuesday or Wednesday. "We are in talks with the Iranians, and I think there is a chance we may have a deal today or tomorrow to open the Strait and move towards a more normalized position in this conflict," Bessent told CNBC. The remarks helped send benchmark crude prices to their lowest levels in three weeks. Brent crude fell $3.11, or 3.7%, to $80.66 a barrel, while US West Texas Intermediate (WTI) dropped $3.58, or 4.5%, to $76.76 a barrel. Both contracts touched their lowest levels since 13th July. The decline reversed earlier gains of more than 2% as markets reacted positively to signs of diplomatic progress. Giovanni Staunovo, an analyst at UBS, said oil markets were responding to expectations that diplomacy could help restore energy flows through the critical waterway. "Oil prices are pairing earlier gains on comments from Qatari officials saying a potential US-Iran resolution has been drafted," he said. Strait of Hormuz remains central issue The future of the Strait of Hormuz remains one of the key issues in negotiations between Washington and Tehran. Before the conflict erupted in late February, the strategic waterway handled approximately 20% of global oil and liquefied natural gas supplies, making it one of the world's most important energy transit routes. Concerns over maritime security continue to affect shipping movements across the region. The UK Maritime Trade Operations agency reported an incident on Tuesday approximately 20 nautical miles northeast of Oman's Al Khasab after a cargo vessel signalled that it had been struck by an unidentified projectile. Although Bessent said he had observed "quite a few" ships leaving the Strait of Hormuz, industry participants remain cautious as negotiations continue. Market focus on diplomatic outcome Goldman Sachs said Brent crude is likely to remain within an $80-$90 per barrel range until there is greater clarity on whether a new US-Iran agreement will be reached or whether tensions escalate once again. While oil production across the Middle East has recovered from the lows seen during the conflict, analysts note that output remains below pre-war levels, leaving the global market relatively tight. For now, investors are closely watching diplomatic developments as hopes grow that a breakthrough agreement could help restore confidence, improve shipping access through the Strait of Hormuz and ease pressure on global energy markets.