Oil Price Today (August 5): Crude dips for 3rd session amid hopes of a short-term war deal. What's next?

Oil prices extended fall for a third session in a row on Wednesday after as investors tracked developments around efforts to end the U.S.-Iran conflict and reopen the Strait of Hormuz to commercial shipping.

Crude oil price on August 5

Brent crude futures were down $1.1, or 1.34%, at $78.30 a barrel, while U.S. West Texas Intermediate crude declined $1.43, or 2%, to trade at $74 a barrel.


Brent had settled more than 5% lower on Tuesday, extending Monday's sharp decline after comments from Qatar fuelled hopes that an agreement could be reached soon. Before the conflict began, nearly 20% of the world's oil and liquefied natural gas passed through the Strait of Hormuz, while oil prices had risen 50% in March alone.

Also read: Iran, Oman near Hormuz reopening deal as talks advance

Speaking to CNBC, U.S. Treasury Secretary Scott Bessent said Washington and Tehran could reach an agreement to reopen the Strait of Hormuz as early as Tuesday or Wednesday. According to him, such a deal would allow commercial vessels to move freely through the waterway.

U.S. Secretary of State Marco Rubio said the U.S. was participating in talks involving Iran and Oman. While negotiations were moving forward, he noted that no final agreement had been reached.

Qatar, which is serving as a key mediator in the negotiations, said efforts were continuing to secure a short-term breakthrough that could pave the way for broader discussions between the U.S. and Iran.

U.S. President Donald Trump also spoke with Qatari Emir Sheikh Tamim Bin Hamad Al-Thani to discuss ways to de-escalate the situation. Separately, a Bloomberg report said Iran was considering allowing European countries to remove mines from the Strait of Hormuz, although Tehran has not officially confirmed the report.

A key hurdle in the negotiations remains whether Iran will continue to seek a degree of control over the strategic waterway and whether the U.S. will reject such a proposal.

Trump said on Monday that discussions with Tehran had begun and described the current situation as Iran's "last chance" to strike a deal. Iranian officials, however, maintained that no negotiations with the U.S. were taking place.

Where is oil headed?

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.

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