Oil prices fell for a third straight day on Tuesday, as talks between Iran and Oman raised hopes that the Strait of Hormuz could reopen, easing fears about global crude supply.

Brent crude, the global benchmark, for October delivery fell 2.5% to $86.38 a barrel. West Texas Intermediate, the U.S. benchmark, dropped 2.2% to $80.53, after dipping below the $80 mark earlier in the session. Both contracts were on track for their lowest settlement in nearly two weeks. Oil prices are down more than 6% this week on diplomatic optimism.

The declines came after Iran and Oman said their foreign ministers had held talks in Tehran on a framework to temporarily reopen the Strait of Hormuz. The strait — the narrow waterway between the two countries that provides the only sea route out of the Persian Gulf — had supplied roughly 20% of the world's crude before the conflict disrupted flows, with most of those cargoes bound for Asian refiners. Hormuz has long been a flashpoint during periods of regional tension, one reason even incremental progress toward reopening draws close attention from governments and shippers.

In a joint statement, the two countries said the proposed framework would establish a temporary shipping route through the waterway. They also agreed to work together to clear the strait of mines.

Hormuz Deal Still Faces Hurdles

President Trump said on Truth Social that the U.S. Navy had already removed or detonated all of the mines in the strait, a claim that some analysts have questioned.

BREAKING: President Trump says the US Navy has cleared all mines in international waters in the Strait of Hormuz. US oil prices extend losses toward $82/barrel. pic.twitter.com/mVBD5APCGr

— The Kobeissi Letter (@KobeissiLetter) August 25, 2026

Negotiations between Oman and Iran will continue, the joint statement said, with the goal of reaching agreement on a permanent shipping corridor and on the future management of the strait.

However, analysts at ING warned that even a deal between Oman and Iran would not bring oil flows back to pre-war levels quickly. They said the United States would need to lift its blockade on Iranian ports and ease sanctions before any real normalization could happen.

The U.S. imposed stricter economic sanctions on Iran earlier this week and warned other countries against trading with Iran. Iran, for its part, accused the U.S. of obstructing progress on a Hormuz agreement with Oman.

Despite those tensions, Russian state media reported that the U.S. and Iran had reached a new ceasefire deal that would be announced in the coming days. Pakistan, a regional mediator, also said peace talks were making progress.

Axios reported that around 40 ships transited the strait over the weekend. U.S. diplomats are also reportedly set to return to the Middle East.

Russia-Ukraine Conflict Adds Further Supply Risk

Oil's weekly losses came even as new reports warned of fresh supply disruptions elsewhere. Russia, one of the world's largest oil exporters, is reportedly considering escalating ballistic missile attacks on Kyiv and other infrastructure targets after concluding that peace negotiations have stalled.

Ukraine has previously retaliated against Russian aggression by striking Moscow's energy and oil refining infrastructure. Any escalation could add further pressure to already strained global supply chains.

U.S. CIA Director John Ratcliffe reportedly traveled to Moscow this week to meet with Russian officials. The agenda of that meeting was not immediately clear.

Shipping data showed that flows through the Strait of Hormuz remain well below pre-war levels despite the ongoing diplomatic activity.