Global oil prices extended a sharp decline on Thursday, with Brent crude falling 3.5 percent to $97.5 a barrel by 0715 GMT and US benchmark West Texas Intermediate dropping more than 3 percent to $92, as diplomatic moves cooled fears of a wider disruption at the Strait of Hormuz.
The slide followed reports that Washington had sent Iran a one-page memorandum of understanding through Pakistani intermediaries, framed as a way to formally end the Gulf conflict and lay out a phased reopening of the Strait. Tehran is expected to respond within days after confirming it is reviewing the proposal, with broader talks on Iran’s nuclear programme reportedly deferred to a later stage.
US President Donald Trump cautioned that no agreement had been finalised, calling it “a big assumption” that Iran would accept, and warning the United States could resume military strikes if Tehran failed to comply.
Prices also came under pressure after Trump temporarily reversed a plan to provide US escort cover for commercial shipping transiting Hormuz. According to NBC News, the about-turn followed a decision by a key Gulf ally to suspend US access to its bases and airspace for the operation. Markets read the sequence as a shift away from a military posture toward diplomacy, easing fears of further disruption to one of the world’s most critical energy chokepoints.
The decline reverses much of the war-era premium that pushed Brent above $115 at the early-May peak. For Sri Lanka, lower crude reduces the import bill at the Ceylon Petroleum Corporation and at the same time strengthens the Opposition’s case for a domestic fuel price reduction once cargoes secured at war-era prices have been worked through.
Source: Ada Derana / TRT World.
