Oil prices fell for a fourth consecutive day on Thursday on expectations that diplomacy may reopen the Strait of Hormuz (Geo News).
Brent crude futures were down 60 cents, or 0.7 per cent, at $87.24 a barrel by 0004 GMT — a fourth day of losses.
West Texas Intermediate fell 56 cents, or 0.7 per cent, to $81.67, down for a fifth day.
What is driving it
Iran and Oman are working to finalise details of an agreement to control the Strait of Hormuz, a senior Iranian source said on Wednesday, after Iran’s Revolutionary Guards said the two countries had agreed how to share the waterway — and its revenues.
Qatar’s prime minister travels to Tehran on Thursday to relaunch diplomacy between Washington and Tehran.
How far flows have fallen
The strait carried oil and gas shipments equal to about one-fifth of global consumption before the US-Israeli war on Iran began on February 28.
Flows have since slipped to roughly one-quarter of pre-war levels.
That is the number underneath everything else in this story. A waterway operating at 25 per cent capacity is what has held crude elevated for six months.
Why it matters in Pakistan
Brent at $87.24 is meaningfully below the $91-plus that prevailed through much of August, and it is the direction rather than the level that will register here first.
Pakistan’s fuel prices are set daily against international movements. Petrol stands at Rs341.98 a litre and high-speed diesel at Rs370.69. The arrangement under which four Karachi refineries absorbed part of their margin to cut diesel by Rs32.63 was written to last only until the situation in the strait improves — which means a genuine reopening would end the subsidy at the same time as it lowers the underlying price.
Field Marshal Asim Munir discussed reopening the strait in Tehran on Monday.
