Trump Warns Iran as Strait of Hormuz Talks Progress and Oil Prices Fall

Global oil prices fell sharply after fresh signs of progress in diplomatic efforts to reopen the Strait of Hormuz, a key global shipping route. The development came as US President Donald Trump warned that Iran would face severe consequences if the waterway remained closed for commercial shipping.

Speaking during a visit to California, Trump said he expected the Strait of Hormuz to reopen "very soon." He added that if Iran failed to restore normal shipping through the strategic route, it would be "hit very hard."

Oil Prices Fall on Hopes of a Breakthrough

Investor confidence improved after senior US officials suggested that negotiations were moving in a positive direction.

Brent crude, the international benchmark for oil prices, dropped nearly 5% on Tuesday to below $80 per barrel, its lowest level in almost three weeks. Prices continued to edge lower during Wednesday's Asian trading session.

US West Texas Intermediate (WTI) crude also declined by more than 5%, falling to around $76 per barrel as traders anticipated an improvement in global oil supplies.

US Says Talks Are Moving Forward

US Secretary of State Marco Rubio said discussions aimed at restoring shipping through the Strait of Hormuz had made progress, although a final agreement had not yet been reached.

Treasury Secretary Scott Bessent also expressed optimism, saying a deal could be reached within days if negotiations continued positively.

According to US officials, the proposed arrangement would ensure freedom of navigation for commercial vessels using the strategic waterway.

Iran Denies Direct Negotiations with Washington

Despite optimistic statements from US officials, Iran rejected claims that it was negotiating directly with Washington.

Iran's Foreign Ministry said discussions were taking place only with Oman, which has been acting as a mediator. Officials described those talks as constructive but did not confirm whether an agreement was close.

Meanwhile, Qatar, another key regional mediator, said diplomatic efforts were continuing but acknowledged that no direct US-Iran talks were currently scheduled.

Strait of Hormuz Remains Critical for Global Energy

The Strait of Hormuz is one of the world's most important maritime trade routes.

Before the latest conflict began, nearly 20% of global oil and liquefied natural gas (LNG) supplies passed through the narrow waterway every day. Any disruption immediately affects global energy markets and often leads to higher fuel prices worldwide.

US Central Command (CENTCOM) said the southern shipping route through the Strait remains open for commercial vessels navigating international waters.

Regional Tensions Continue to Disrupt Shipping

Although negotiations have raised hopes of easing tensions, security risks remain high across the region.

Iran has significantly restricted shipping through the Strait of Hormuz since the conflict escalated earlier this year. At the same time, the United States has maintained pressure on Iranian ports, while Iran-backed Houthi rebels have continued attacks around the Red Sea.

The Red Sea had become an alternative shipping route after disruptions in the Strait of Hormuz. However, recent attacks have also made that passage increasingly risky.

On Tuesday, an Indian-flagged commercial vessel reportedly sank near Yemeni waters after being struck by a projectile. Indian authorities confirmed that all 14 crew members were rescued safely.

Markets Remain Focused on Diplomatic Outcome

Despite the recent decline in oil prices, analysts say markets remain highly sensitive to developments in the region.

Previous diplomatic efforts have failed to reduce tensions, leading to repeated swings in crude oil prices. Traders are now closely watching whether the latest negotiations can produce a lasting agreement that restores normal shipping through one of the world's most important energy corridors.

A successful deal could help stabilise global oil markets, while any setback could quickly push energy prices higher again.