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Oil fell almost 4% on Monday after an Israeli newspaper reported that Iran had dropped its demand to charge ships for passing through the Strait of Hormuz. A Qatari official said the report was false.
Brent crude fell from above $98 a barrel to below $94 after the report, according to Capital Brief. By 14:05 GMT it was trading at $93.44, down 4.96% from Friday's close of $98.32. US crude (WTI) fell 4.6% to $86.65.
The drop adds to last week's 16% fall in Brent, its steepest weekly decline since the start of the Covid-19 pandemic.
What the report said
Israel Hayom, citing two diplomatic sources, said Iran had approved terms brokered by Qatar to reopen Hormuz. Under them, Tehran would reopen the strait and stop attacks on Gulf tankers.
In return, Washington would lift its naval and economic blockade of Iran and release $8 billion in Iranian funds frozen in Qatar. Iran would drop its demand to control the strait and charge transit fees. It would still keep its nuclear program off the table.
Qatar's prime minister was due to meet President Donald Trump at the White House on Monday. A Qatari official told Bloomberg the report was false and that talks were still going on.
Washington is split
Trump said on Sunday that new US strikes on Iran were "highly unlikely" if talks produced a strong agreement. Secretary of State Marco Rubio, speaking the same day, called Iran's demands "outrageous and ridiculous" and said the two sides were not close to a breakthrough.
Iranian Foreign Minister Abbas Araghchi said Iran's offer to reopen Hormuz within two days still stands, on condition that the war ends on all fronts. A similar US-Iran memorandum agreed in Switzerland in May collapsed after an Iranian attack on tankers in the strait.
Why it matters here
Lower prices ease fears of a supply shortage, but they also cut into the revenue the kingdom earns from every barrel it sells. While Hormuz stays disrupted, most Saudi exports leave through the Red Sea via the East-West pipeline, which was targeted near Madinah on Monday.
Analysts say oil is falling on hopes of a deal rather than concrete progress. Energy consultancy FGE NexantECA sees low odds of a lasting US-Iran agreement soon, and expects any recovery in Hormuz traffic to be gradual.
