Oil Price Today (August 6): Crude oil dips below $80 on hopes Iran-Oman deal could end Iran war. What are experts saying?

Oil prices edged lower on Thursday as investors weighed signs of progress in Iran-Oman talks that could lead to a U.S.-Iran peace agreement, potentially ending the five-month conflict and reopening the Strait of Hormuz.

Crude oil price on August 6

Brent crude futures fell 37 cents, or 0.5%, to $79.08 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 53 cents, or 0.7%, to $74.69 a barrel. Brent had ended marginally higher on Wednesday, whereas WTI settled slightly lower.

A proposed agreement between Iran and Oman aimed at ending the U.S.-Iran conflict would hand Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters on Wednesday. The proposal marks one of the biggest concessions made to Iran so far.


Also read: Trump claims Iran reached out for talks, says clarity may come in 48 hours

US President Donald Trump has said a deal to reopen the strait is close even as US officials have consistently maintained that they would not agree to Iran controlling access to the world's most important energy trade route.

Iran has also warned Gulf states that any fresh U.S. attack on its territory would lead to retaliation against key energy infrastructure across the region. The warning is seen as an effort by Tehran to raise the cost of military action by threatening Washington's closest regional allies.

Separately, Yemen's Iran-aligned Houthis said on Wednesday they had launched missile attacks on a Saudi oil tanker near the Red Sea port of Yanbu and another Saudi oil tanker in the Gulf of Aden. Saudi Arabia has not confirmed either incident. The risk of Houthi attacks disrupting shipping in the Red Sea continues to temper optimism over a broader recovery in Middle East shipping routes.

What are experts saying?

The outlook for oil prices continues to depend on how long supply disruptions persist. JPMorgan estimates that every additional month of disruption could lift Brent crude prices by about $7 to $8 a barrel. If the disruption extends to three months, the bank expects average monthly Brent prices to reach around $114 a barrel.

Goldman Sachs has also cautioned that Brent could rise to $120 a barrel if disruptions to shipping through the Strait of Hormuz, the world's most important oil transit route, continue.

Read more:How the Iran war exposed cracks in the US-Israel partnership

Despite that risk, Goldman Sachs' base case assumes tensions in the Middle East will eventually ease. Under that scenario, the bank expects Brent to average $80 a barrel in the fourth quarter and $75 a barrel next year. However, it said the risks to its forecast remain skewed to the upside, citing the possibility of continued disruptions in the Strait of Hormuz and the Red Sea.

"The direction of our outlook is unchanged; the path and the timeline have shifted. We still expect oil to cool as we move into 2027, for three reasons: supply outside the conflict zone is expanding, with OPEC+ raising production targets, the UAE at record output and non-OPEC barrels responding to price," said Anindya Banerjee, Head of Commodity Research at Kotak Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)