Oil Extends Drop to $95 After Iranian Media Report on Draft Deal

• US declares memo as ‘fabrication’ 

•Trump says no one will control Strait of Hormuz

Emmanuel Addeh in Abuja

Oil extended losses yesterday, falling over 5 per cent after Iranian state TV said it had seen a draft of an initial, unofficial framework for an agreement with the United States on ending their conflict and reopening the Strait of Hormuz.

The report, plus a pick-up in tanker traffic through the strait, outweighed Iran’s earlier comments that the United States had violated a ceasefire and a tanker on Tuesday reporting an explosion off the Oman coast.

Brent crude futures fell $3.66, or 3.7 per cent, to $95.3 a barrel, while U.S. West Texas Intermediate (WTI) crude lost $5.19, or 5.59 per cent, to $88.70.

The losses more than erased Brent’s gains from Tuesday, a Reuters report said, with Brent and WTI touching intraday lows of $94.16 and $87.77 per barrel on Wednesday, their lowest in over a month.

The U.S. will withdraw military forces from the vicinity of Iran and lift its naval blockade, Iranian state TV said, adding that the management of ship traffic through the Strait of Hormuz will be handled by Iran in cooperation with Oman.

July Brent futures rose 3.6 per cent in the previous session after the U.S. carried out new strikes in Iran, hurting hopes that had risen over the weekend that Washington and Tehran would reach a peace deal.

After an April ceasefire in the three-month-long conflict, both sides indicated they had made progress in talks toward reopening the Strait.

Iran’s effective closure of the Strait of Hormuz has taken more than 14 million barrels per day of Middle East oil supply offline according to the International Energy Agency (IEA), Reuters said.

However, the White House called the draft memo on war circulated by Iranian media a ‘complete fabrication’. Iranian state TV said the memorandum of understanding outlines that the US will end its blockade and Iran will reopen the Strait of Hormuz.

“This report from Iranian controlled media is not true and the MOU they ‘released’ is a complete fabrication. Nobody should believe what the Iranian state media is putting out. Facts Matter,” the White House’s Rapid Response account posted on X.

Iranian state media reported the MOU would call for US military forces to withdraw from the vicinity of Iran and lift the blockade of Iranian ports, CNN reported.

Some of the details are similar to how US officials have described the emerging deal. American officials have said President Donald Trump would be willing to lift the blockade as long as Iran allows commercial vessels to transit the Strait or Hormuz.

“As President Trump has said, negotiations are proceeding nicely and he has made his redlines clear. President Trump will only make a good deal for the American people, which must ensure that Iran can never have a nuclear weapon,” said Olivia Wales, a White House spokeswoman, in response to the Iran state TV report.

Meanwhile, Trump has said the Strait of Hormuz will be open to everyone and not controlled by any country under any deal reached with Iran, adding there were no discussions about easing sanctions on Tehran.