WTI slips below $74.00 as Hormuz talks progress, US stocks rise

• US-Iran talks advance on an interim agreement to reopen the critical oil transit route.
• Iran reviews mine-clearing proposals, while Saudi Arabia holds mediated talks with Houthi rebels.
• US crude stockpiles rose by 2.69 million barrels, defying expectations of a drawdown.

West Texas Intermediate (WTI) oil price falls after paring its daily gains, trading around $73.80 per barrel during the Asian hours on Wednesday. Crude oil prices have declined as supply concerns ease, driven by building diplomatic momentum surrounding a potential agreement to reopen the Strait of Hormuz.

On Tuesday, Qatari officials announced that an interim proposal had been drafted, with both Washington and Tehran signaling tangible progress toward restoring access to the critical maritime transit route. This diplomatic breakthrough follows US President Donald Trump’s decision to suspend planned military strikes against Iran, choosing instead to give negotiations space while maintaining his call for the immediate reopening of the waterway.

Meanwhile, broader regional efforts are underway to secure key shipping lanes. Iran is currently reviewing a framework that would permit European nations to clear naval mines from the strait, alongside advancing discussions with Oman to safeguard trade routes. Concurrently, Saudi Arabia is engaging in mediated talks with Yemen's Houthi rebels via Omani channels, aiming to prevent further escalation in the adjacent Red Sea corridor.

US crude oil inventories rose by 2.69 million barrels for the week ending July 31, defying market expectations of a 2 million-barrel draw and following an increase of 3.3 million barrels the prior week. Excluding the Strategic Petroleum Reserve (SPR), commercial crude inventories have fallen by more than 58 million barrels over the past 16 weeks and are down 7.2 million barrels year-to-date. Meanwhile, the SPR declined by another 2.9 million barrels to 304.8 million, approaching its estimated operational minimum of 250 to 300 million barrels.

Oil supply resilience underpins Saudi output assurances

BNY’s Geoff Yu highlights that Saudi Aramco has been able to maintain operations despite recent disruptions in the region, noting that “alternative pipelines, storage and export terminals have preserved business continuity despite the disruption around the Strait of Hormuz.” This infrastructure flexibility has allowed the company to safeguard output and exports even as geopolitical risks around key shipping lanes remain elevated.