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GLOBAL oil prices extended their decline for a third consecutive session on Wednesday after reports that Iran and Oman were discussing a “temporary joint maritime corridor” through the Strait of Hormuz, raising hopes that tensions around one of the world’s most critical energy routes could ease.
Crude oil slipped to around US$81 per barrel, while Brent crude fell to approximately US$87, as traders reacted to signs of diplomatic progress and a possible reduction in the risk of prolonged disruption to global oil supplies.
Technical discussions between Iran and Oman are expected to continue as both sides work towards a permanent maritime arrangement governing the future administration of the Strait of Hormuz.
The proposed framework would include information-sharing mechanisms, traffic management and the provision of maritime and security services.
The talks have helped calm market concerns over potential disruption to shipping through the strategically vital waterway, through which a substantial share of the world’s seaborne oil passes.
Diplomatic efforts have also intensified, with Pakistan’s army chief travelling to Tehran to support negotiations, while Qatar said it was continuing its mediation efforts.
Oil prices have faced additional pressure this week after Washington’s latest attempt to intensify economic pressure on Iran proved less aggressive than markets had anticipated.
The United States moved to further isolate Iran economically but stopped short of imposing secondary sanctions on countries continuing to trade with the Islamic Republic, easing immediate fears of wider disruptions to global energy markets.
The more measured approach reduced concerns that a major escalation in US economic pressure could further threaten global oil supplies.
Meanwhile, the US dollar index steadied near 99 after gaining ground in the previous session, supported by safe-haven demand as Washington sought to cut Iran off from the global financial system.
US Treasury Secretary Scott Bessent announced plans on Monday to further isolate Iran through sanctions targeting countries doing business with the Islamic Republic, underlining the dollar’s central role in international trade.
Despite its recent gains, however, the greenback remained near three-month lows after the US Treasury announced an expansion of its buyback programme for long-dated government debt in an effort to contain rising borrowing costs.
Markets remain sceptical that the move will provide more than temporary relief, with investors renewing concerns over a potential US debt crisis and continued weakness in the dollar.
Attention is now turning to the latest US Personal Consumption Expenditures (PCE) price index and a speech by Federal Reserve Chairman Kevin Warsh at the annual Jackson Hole symposium this week for fresh signals on the outlook for US monetary policy.
Reuters reported on Wednesday that the US dollar held within a narrow range against major currencies on Wednesday as investors awaited fresh inflation data from the United States and other major economies ahead of the Federal Reserve’s Jackson Hole symposium this weekend.
The greenback has remained largely rangebound over the past week, with markets turning their attention to July’s Personal Consumption Expenditures (PCE) data due later on Wednesday for clues about the outlook for US interest rates.
The dollar index, which measures the US currency against six major peers, was steady at 98.918 in early Asian trading after ending a three-day winning streak on Tuesday.
Market sentiment was also supported by signs of potential de-escalation in the Middle East, including plans to return US diplomatic personnel to the region and efforts to reopen the Strait of Hormuz between Iran and Oman.
“Signs of Middle East de-escalation, including plans to return U.S. diplomatic staff to the region and efforts to reopen the Strait between Iran and Oman, weighed on oil prices and supported broader risk sentiment,” Westpac analysts said in a note.
Brent crude fell 2.1% to US$86.68 a barrel as Iran said it had resumed discussions with Oman on managing the strategically important Strait of Hormuz, while diplomatic negotiations between Washington and Tehran remained stalled.
The Australian dollar edged 0.1% higher to US$0.7172 after data showed Australia’s trimmed-mean consumer price inflation rose at an annualised rate of 3.6%.
The New Zealand dollar slipped 0.2% to US$0.5962 ahead of the Reserve Bank of New Zealand’s interest-rate decision next week. Markets are overwhelmingly pricing in a 25-basis-point increase to 2.75%, according to LSEG data.
Against the Canadian dollar, the US currency weakened 0.1% to C$1.38405 after recovering some ground over the previous two sessions.
The move followed Canada’s decision on Tuesday to impose retaliatory tariffs on about US$20 billion worth of annual US imports and introduce support measures for affected businesses and workers after trade negotiations with Washington collapsed last week.
Yen Holds Steady As BOJ Tightening Bets Grow
The euro was little changed at US$1.1675, while the British pound was also flat at US$1.3647.
The yen remained steady at 159.14 to the dollar, staying below levels that had previously prompted joint intervention by US and Japanese authorities.
Currency investor Stephen Jen described the yen’s recent movement as a “watershed moment” for the currency.
The Bank of Japan said on Wednesday that Governor Kazuo Ueda would not attend this week’s Jackson Hole gathering because of a scheduling conflict. Board member Naoki Tamura will represent the central bank instead.
A majority of economists polled by Reuters expect the Bank of Japan to accelerate its monetary tightening and raise interest rates again in September, with forecasts also pointing to a higher eventual terminal rate.
Bitcoin, Ether Extend Rebound
Cryptocurrencies continued their recovery as investors returned to trades centred on potential dollar debasement.
Bitcoin rose 0.8% to US$78,829.03, while ether gained 0.7% to US$2,453.10.
The two cryptocurrencies have risen about 25% and 31%, respectively, so far this month.
Gold, meanwhile, slipped 0.5% to US$4,633.94, trimming its monthly advance to about 15%.
With the PCE inflation figures and Jackson Hole meeting looming, markets remain focused on whether fresh US economic data will reinforce expectations for a shift in the Federal Reserve’s interest-rate policy. - August 26, 2026
