Oil prices continue to fall, hitting a one-week low, as Oman proposes regional joint management of the Strait of Hormuz

1. On Tuesday, international oil prices fell for the third consecutive trading day. Brent crude September futures at one point dropped 2.7% to $85.94 per barrel, while U.S. crude September futures declined 2.4% to $80.60 per barrel, both hitting a one-week low. The market holds expectations that the U.S.-Iran conflict may be resolved through diplomatic means, although persistent sluggish shipping volume in the Strait of Hormuz and supply disruption risks continue to provide some support for oil prices.2. In the previous trading day, both contracts plunged by about 8% due to the U.S. suspending air strikes against Iran over the weekend, reaching their lowest levels since July 20.3. U.S. President Trump stated on Monday that both sides are engaged in “good dialogue” and that an agreement on the conflict is possible, but warned that air strikes would resume if negotiations fail. IG analysts pointed out that signs of easing tensions have temporarily alleviated price surge pressure, but overall uncertainty remains high.4. Yemen's designated foreign minister stated that the Houthi forces are attempting to replicate Iran's strategy in the Strait of Hormuz within the Bab el-Mandeb Strait. Analysts believe the Houthis' ability to fully blockade is questionable, but shipping volumes in the Red Sea and Hormuz Strait have visibly decreased. The key reason why oil prices have not further surged is the shrinking demand in Asia.5. On the supply side, the Caspian Pipeline Consortium’s Black Sea terminal on Russia’s coast has resumed loading after a one-week shutdown caused by a drone attack, creating downward pressure on oil prices. However, Saudi Arabia intercepted drones targeting oil facilities and retains the right to retaliate, indicating ongoing risks of supply disruptions. Data from Barclays shows that as of the week ending July 24, net exports of crude and refined products through the Strait of Hormuz averaged 2.9 million barrels per day, far below the previous week’s 5.9 million barrels per day.6. Diplomatically, a Gulf source revealed that Oman has proposed a mechanism for joint management of the Strait of Hormuz involving regional countries, adopting a voluntary payment model that has already received support from Gulf states. The proposal is inspired by the Malacca Strait model, with users of the strait voluntarily funding navigation safety, environmental protection, and search and rescue operations.