Oil Prices Climb Again as US-Iran Strait of Hormuz Talks Stall
Oil prices rose for a second straight session on August 11, 2026, after negotiations between the United States and Iran over a peace deal and the reopening of the Strait of Hormuz hit a wall, reviving concerns about supply disruptions in the Middle East (Firstpost). The latest setback follows a roughly 5% jump on August 10 and a similar spike on August 9, wiping out gains from early August when crude had sold off on optimism that a deal was close (CNBC; Reuters).
The whipsaw in crude prices over the past two weeks mirrors a negotiation process that has swung repeatedly between apparent breakthrough and collapse. On August 3–4, oil settled about 5% lower after reports of progress in US-Iran talks led traders to shed the geopolitical risk premium — the extra dollars per barrel that buyers pay when conflict threatens supply. Brent crude (the global benchmark price) then steadied at $79.45 a barrel on August 5, up just 9 cents, or 0.11%, as investors weighed conflicting signals about whether safe shipping through the Strait could be restored (Reuters; Reuters). By August 7, Brent had climbed more than $1 a barrel on renewed uncertainty (Reuters).
The latest deterioration centers on a proposed Iran-Oman framework that would end five months of war and give Tehran control over ships entering the Gulf through the Strait of Hormuz (Reuters). Iranian Foreign Minister Abbas Araghchi said on August 10 that Tehran and Oman were "very close" to an agreement on reopening the waterway (Al Jazeera). Iran's Foreign Ministry separately stated that the Strait is open to "non-hostile" ships while barring US and Israeli vessels, and that talks with Oman over a safe navigation regime have been underway for roughly two months (Iran International; Iranian MFA). Iran's Foreign Ministry also said on August 9 that its talks with Oman on securing a shipping route were approaching their final stages (SBS News. Both sides have demanded compensation, and hopes for a near-term reopening have faded as a result (Reuters.
The Strait of Hormuz disruption traces back to a broader conflict that escalated sharply in the spring. On April 11, US Vice President JD Vance said negotiations between the US and Iran ended without a deal after 21 hours (AP News). The following day, US Central Command said the Navy would "immediately" begin a blockade to stop ships from entering or leaving the Strait (AP News). By late April, Iran offered to end its chokehold on the Strait in exchange for the US lifting its blockade, according to two regional officials (AP News). As of mid-May, Iran still held its grip on the waterway while the US maintained its blockade of Iranian ports (AP News).
A tentative de-escalation signal came in March, when Iran allowed 10 oil tankers to pass through the Strait, a gesture described at the time as showing that the US team was "dealing with the right people" (AP News). Iran and Oman subsequently held technical talks on the Strait, announced on July 26 via Iran's Foreign Ministry website, and Iran's Foreign Ministry spokesperson addressed the Foreign Minister's visit on July 12 regarding arrangements for the management of transit and navigation through the waterway (Iranian MFA; Iranian MFA).
The broader context here is a market trying to price a binary geopolitical outcome with imperfect and contradictory information. The oscillation between 5% selloffs and 5% rallies over a two-week window indicates that the geopolitical premium embedded in Brent is being driven almost entirely by headline risk around the negotiations rather than by changes in physical supply and demand. When Araghchi signals a deal is "very close," traders strip out the risk premium. When talks stall and both sides harden their positions on compensation and control, that premium gets re-priced immediately. The proposed framework giving Tehran control over vessel entry adds a structural dimension that goes beyond a simple reopening — it would institutionalize Iranian authority over the chokepoint that carries roughly a fifth of global oil and gas shipments. For market participants, the key variable is not whether the Strait reopens but on what terms, and whether any agreement survives implementation longer than the March tanker passage did.
Iran's August 9 Foreign Ministry statement addressing what it called an "interventionist communiqué" issued by the US Secretary of State and foreign ministers suggests the diplomatic temperature is rising rather than cooling, despite Araghchi's optimistic framing (Iranian MFA. Araghchi also issued a separate statement on the presence of foreign forces in the Persian Gulf region, a theme that has been a consistent thread in Iranian diplomatic messaging since at least February (Iranian MFA).
For now, the market is left pricing an optionality that swings 5% on each diplomatic signal. With Brent having already given back the early-August discount and then some, the risk skew is asymmetric: a confirmed deal could compress the geopolitical premium quickly, while a full collapse of the Oman-mediated track would leave no near-term mechanism for restoring unhindered traffic through a waterway that remains under dual blockade.
