Oil prices fall on hopes Strait of Hormuz could reopen

Oil prices fell to a three-week low on Tuesday as senior US officials raised hopes of a deal with Iran to reopen the key Strait of Hormuz waterway.

US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent both announced talks had progressed to allow shipments to potentially resume as soon as this week.

The cost of a barrel of brent crude, the global benchmark for oil prices, fell by almost 5% to under $80 on the news of supply disruptions potentially being eased.

But the failure of previous negotiations in recent months to de-escalate the conflict between the US and Iran has led to a volatile oil market, with drivers ultimately being hit by higher fuel prices at the pumps.

On Tuesday, along with the drop in Brent crude, US West Texas Intermediate prices were down more than 5%, to $76 a barrel. Both contracts dropped to their lowest levels since 13 July.

US Secretary of State Marco Rubio said there had been progress made in discussions on getting more ships through the Strait with Iran and Oman.

"There's been progress made in those talks, but not finality yet. We're hoping that will happen very shortly," he told reporters at the State Department.

Bessent said a deal to reopen the Strait of Hormuz could be agreed as soon as Tuesday or Wednesday.