US crude futures dropped more than 6% in early Asian trading on Tuesday after reports emerged that Washington and Tehran are discussing a framework to reopen the Strait of Hormuz.
Nikkei reported that the United States and Iran are negotiating a plan to reopen the strategically vital waterway approximately 30 days after the two countries reach a deal to end hostilities.
US West Texas Intermediate crude stood at $90.73 per barrel at 2205 GMT, a fall of $5.90 or 6.1% on the session, extending a significant losing streak for the contract.
The WTI contract had already fallen 6.5% in the previous trading session, meaning the benchmark recorded back-to-back daily declines of historically notable magnitude.
The Strait of Hormuz is one of the world’s most critical shipping chokepoints, through which a substantial share of global oil and liquefied natural gas exports pass each day.
Any agreement between the US and Iran that leads to the reopening of the strait would significantly ease supply concerns that have driven energy prices sharply higher in recent weeks.
Commodity trading firm Mercuria has alleged that the Baltic Exchange’s tanker index failed to accurately reflect the closure of the Hormuz strait, thereby distorting broader energy markets during the period of disruption.
The Al Sahla tanker, meanwhile, is expected to reach the Tianjin LNG terminal in China by 14 June, according to vessel tracking data cited alongside the broader market developments.
Calgary-based energy firm Zenith Energy Ltd has separately agreed terms for the sale of its ZEN-260 onshore drilling asset, though this transaction remains distinct from the geopolitical developments affecting crude pricing.
The scale of the two-day price decline in WTI reflects how significantly markets had priced in prolonged disruption to Hormuz shipping routes before the Nikkei report altered sentiment.
Traders and analysts will be closely watching developments in US-Iran negotiations, as any formal agreement to end hostilities could trigger further downward pressure on crude benchmarks in the near term.
The situation remains fluid, and no formal deal between Washington and Tehran had been announced at the time the market moves were recorded on Tuesday morning.