Oil prices fell to a three-week low on August 4 after Secretary of State Marco Rubio and Treasury Secretary Scott Bessent said that talks with Iran and Oman had advanced far enough that shipping through the Strait of Hormuz could resume as soon as this week. BBC News

Brent crude, the global benchmark for oil prices, dropped nearly 5% to under $80 a barrel. US West Texas Intermediate, the American benchmark, fell more than 5% to $76. Both hit their lowest levels since July 13. The sell-off extends a volatile period for oil markets that has mirrored every turn in the US-Iran confrontation: prices tumbled more than 6% the prior week when both sides paused military strikes over the weekend, then partially recovered before Monday's renewed plunge.

Speaking to reporters at the State Department, Rubio confirmed that multilateral discussions involving Oman were underway but cautioned that nothing was finalized. "There's been progress made in those talks, but not finality yet," he said. "We're hoping that will happen very shortly." Bessent, appearing on CNBC, was more specific on timing. He said a deal could come as soon as Tuesday or Wednesday and told the network there was "a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict."

No details of the framework under negotiation had been released as of the announcement. Asked whether Iran would be allowed to charge fees for ships passing through the strait, Bessent responded: "It would be freedom of movement." That phrasing, if it holds, would rule out any toll or transit-fee arrangement and frame the reopening in terms of standard navigational rights rather than a commercial concession to Tehran.

The Strait of Hormuz, a narrow waterway between Iran and Oman, handled roughly one-fifth of global daily oil and liquefied natural gas supplies before the US-Iran conflict began in late February, when Iran moved to shut the passage to all shipping. Rubio said at the time that Iran was declaring no one could pass through. The closure triggered months of escalating oil price volatility. Brent futures settled at $103.54 on May 21 as investors priced in a low likelihood of a diplomatic breakthrough. Prices later surged above $122 after President Trump threatened to charge fees on shipping while the strait remained closed.

The broader context here is a conflict that has moved through several distinct phases in under six months: initial shutdown, military escalation, a pause in strikes, and now a potential diplomatic resolution centered on the strait itself. Bessent's January remarks about an Iranian "Strait of Hormuz extortion network," followed by a July 29 Treasury announcement that it had disrupted that network, suggest that the sanctions architecture has been working alongside military and diplomatic pressure. Sanctions, in this context, are government-imposed financial restrictions meant to pressure a country by cutting off its access to money and trade. The Treasury's reference to "sanctions removals" in its January action signals that the financial channel is part of the bargaining, not separate from it.

What this means for markets is a repricing of the geopolitical risk that had been baked into oil prices since February. Think of oil prices like a tension dial: every escalation turns it up, every de-escalation turns it down. Brent's drop from above $122 to under $80 in a matter of weeks tracks the de-escalation arc closely. If a deal materializes on Bessent's timeline, the immediate supply shock eases. If it slips, prices could reverse sharply, as they did when earlier hopes for diplomatic progress gave way to renewed strikes. The absence of disclosed deal terms leaves the durability of any agreement an open question. Rubio's emphasis on "not finality yet" is the key caveat: the market has moved on a signal, not a signed agreement.