Brent and WTI crude reversed sharply lower on Tuesday, each shedding more than 5%, after Qatar's foreign ministry and the U.S. Treasury secretary pointed to progress on a short-term deal with Iran to reopen the Strait of Hormuz. The retreat in crude oil helped push U.S. stocks toward fresh records and pulled Treasury yields lower.
Brent crude fell $4.41, or 5.3%, to $79.36 a barrel on Tuesday, reversing an earlier gain of as much as 3.1% in the session. West Texas Intermediate's September contract, which had climbed as high as $82.33 in morning trading, dropped 5.6% to $75.87 a barrel.
Both contracts fell to their lowest levels since 13 July. The Brent contract has shed 11.9% over the past two trading sessions, according to Dow Jones Market Data. Prices had climbed earlier in the session after a vessel reported being hit by an unidentified projectile Monday night near Al Khasab on Oman's coast, an incident the UK Maritime Trade Operations Centre said it was investigating.
Bessent points to a deal by Wednesday
Qatar's foreign ministry spokesperson, Majed al-Ansari, said talks between the U.S. and Iran are continuing and focused on de-escalation and reopening the waterway, though he said no direct talks are currently taking place. Treasury Secretary Scott Bessent said a deal to reopen the strait could be reached by Wednesday, as the two sides move toward what he described as a more normalized footing in the conflict.
Bessent, asked whether Iran would be permitted to charge ships for passage through the strait, replied: "It would be freedom of movement." Secretary of State Marco Rubio said earlier Tuesday that talks with Iran and Oman on easing shipping through the strait had made progress, though he cautioned no deal was final yet. Iran has said it is not negotiating with Washington, and its foreign ministry called talks with Oman on a new mechanism for vessel passage positive.
Rally spills into stocks and bonds
The retreat in crude fed through to equities and bonds. The Dow Jones Industrial Average climbed more than 1,000 points in afternoon trading, on pace for a second straight record close.
The S&P 500 rose 2% toward its first record close since June 2, while the Nasdaq Composite gained 2.9%. The yield on the 10-year Treasury note fell to 4.62% from 4.68% before Bessent's remarks.
Sources: BBC News, MarketWatch
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