Oil prices extended their intraday losses on Tuesday as fresh diplomatic developments emerged regarding the resumption of shipping through the Strait of Hormuz.

Iran and Oman issued a joint statement on the 25th, confirming that talks have begun on establishing a temporary joint shipping corridor and conducting mine-clearing operations in the strait. The two sides said they will continue technical consultations to work toward a permanent shipping route and related traffic and safety management mechanisms.

Following the announcement, market expectations grew that shipping through the Strait of Hormuz could gradually resume. In late morning trading on Wall Street Tuesday, both major crude benchmarks hit their lowest intraday levels in over a week, with US WTI crude falling to $81.54 per barrel, down nearly 4.1% on the day, while Brent crude dropped to $88.17 per barrel, down more than 4.3% intraday.

For the oil market, the significance of this signal from Iran and Oman lies in the fact that restoring Hormuz shipping is moving beyond "discussions in principle" and advancing toward concrete temporary navigation arrangements. However, there remains a clear gap before the strait can fully return to normal traffic. Tehran has repeatedly stressed that it will only allow free passage through the strait once Washington lifts its maritime blockade on Iranian ports and restores waivers permitting Iranian oil exports.

Iran and Oman Plan Temporary Joint Shipping Corridor

According to state media reports, Iran and Oman issued a joint statement on the 25th proposing the establishment of a mutually agreed safe maritime corridor in the Strait of Hormuz.

Omani officials confirmed that Foreign Minister Badr bin Hamad al-Busaidi visited Iran that day and held talks with his Iranian counterpart Abbas Araghchi. The two sides discussed a "phased framework" designed to provide a practical and actionable foundation for restoring safe navigation through the strait under current conditions.

The framework's core components are twofold. First, it establishes a temporary joint shipping corridor offering new navigation arrangements for merchant vessels transiting the Strait of Hormuz. Second, it implements a joint mine-clearing program to reduce safety risks in the waterway. Oman's foreign ministry noted that both sides will continue technical-level negotiations to promote a permanent shipping corridor and future management arrangements for the strait.

Additionally, Iran and Oman plan to establish mechanisms for information sharing, traffic management, and related navigation and safety services. They emphasized the need for coordination with other Gulf littoral states while adhering to applicable international law and respecting the sovereignty and sovereign rights of coastal nations.

This means the discussions are no longer confined to the question of "whether to resume navigation" but are now touching on operational details such as specific routes, mine clearance, traffic management, and safety services.

From Temporary Corridor to Full Resumption: Key Conditions Remain Unresolved

Media commentary suggests the progress between Iran and Oman marks the first relatively clear sign of a breakthrough after weeks of diplomatic efforts. The two sides are seeking to manage strait traffic through interim arrangements while advancing demining work and continuing discussions on a permanent route and future governance mechanisms.

Earlier, Iranian officials had indicated that agreement had been reached with Oman on the geographic coordinates of a temporary corridor and that finalization of the agreement text was underway. Under the previously disclosed plan, vessels would enter the Strait of Hormuz through Iranian waters and primarily exit via Omani waters.

However, this plan had previously stalled, partly because Oman was concerned that such an arrangement might be interpreted as ceding sovereign rights over its waters to Iran. Meanwhile, disagreements between Iran and the United States over vessel routing had also contributed to the collapse of earlier ceasefire arrangements.

Therefore, a temporary shipping corridor does not mean the Strait of Hormuz has returned to normal navigation.

Iran has already made clear that reaching a shipping arrangement with Oman does not imply Tehran will immediately allow free passage for vessels. Reports indicate that Iran is demanding the US first lift its maritime blockade on Iranian ports and restore waivers that previously permitted Iranian oil exports.

This remains the biggest variable for markets to watch despite the diplomatic progress: whether the technical agreement between Iran and Oman can ultimately translate into a practical navigation arrangement acceptable to all parties, including the United States.

US Escalates Economic Pressure, Making Diplomatic Breakthrough More Critical

As Iran and Oman made progress, the United States is further intensifying its economic pressure campaign against Tehran.

US Treasury Secretary Scott Bessent announced a new round of sanctions against Iran on Monday, expanding threats of "secondary sanctions" against countries and entities conducting economic activity with Iran. The Treasury's latest action targeted nearly 60 individuals, entities, and vessels, bringing digital assets, technology, gold, aviation, and shipping into the expanded pressure scope.

Bessent stated that the US would give relevant countries time to sever economic ties with Iran but did not set a unified deadline. If countries fail to comply, Washington would consider imposing secondary sanctions.

This gives the Iran-Oman shipping negotiations even greater geopolitical significance.

Previously, the US and Iran reached a memorandum of understanding in June that included extending the ceasefire and gradually restoring Hormuz shipping to pre-conflict levels. However, disputes subsequently emerged over vessel routing. Washington pushed for vessels to use a "southern route" near the Omani coast, while Iran argued that vessels were using "unauthorized" routes, leading to renewed escalation.

Now, Iran and Oman's attempt to break the deadlock through a new interim shipping framework could theoretically create fresh space for the stalled US-Iran diplomatic process.

Oil Supply Risks Still Warrant Caution

For the crude market, the Strait of Hormuz is the most directly relevant trading variable in this news flow.

Over the past several months, restricted passage through the strait has continuously elevated global energy supply risks. Media reports noted that markets have been concerned that prolonged failure to restore normal navigation through Hormuz would further tighten global oil supplies. Therefore, any diplomatic signal that reduces the risk of the strait remaining closed could quickly be reflected in oil prices.

Despite Tuesday's sharp intraday decline in crude, the oil market has no reason to fully discount Hormuz supply risks.

After all, what Iran and Oman are discussing remains a temporary shipping framework. Both sides still need to resolve technical issues including demining, route management, information sharing, traffic control, and future governance of the strait. More importantly, the core disagreements between Iran and the US over port blockades, oil exports, and passage rights through the strait remain unresolved.

For the oil market, what truly deserves attention going forward is not the phrase "temporary corridor" itself, but whether this framework can ultimately be implemented and drive a substantive recovery in commercial vessel traffic through the Strait of Hormuz.

If shipping recovery moves from diplomatic statements into actual execution, the risk premium for "prolonged strait closure" that markets have priced into crude could further erode. Conversely, if the exchange of conditions between Iran and the US stalls once again, Hormuz supply risks could rapidly re-emerge as the dominant theme in the oil market.