Oil prices trended lower on Thursday on the progress in Iran-Oman talks, with investors cautiously waiting for signs of a U.S.-Iran peace deal and progress on reopening the Strait of Hormuz.
Brent crude futures fell 33 cents, or 0.42%, to $79.12 a barrel by 0418 GMT. U.S. West Texas Intermediate futures declined 42 cents, or 0.56%, to $74.80 a barrel. Brent settled up slightly on Wednesday, while WTI edged lower.
"Some selling pressure emerged following reports that talks between Iran and Oman are making progress," said Yuki Takashima, economist at Nomura Securities.
Prices have returned to the levels seen when the United States and Iran signed an interim peace agreement on June 17, with investors closely watching whether the two sides can reach a final deal, he added.
A proposed deal between Iran and Oman to help end the U.S.-Iran conflict would give Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters on Wednesday, one of the biggest concessions yet to Iran.
There was no immediate U.S. comment on the proposal. While President Donald Trump has said a deal reopening the strait is imminent, U.S. officials have repeatedly insisted they would never agree to Iran controlling access to one of the world's most important trade route for energy supplies.
"The real hinge point now becomes the trajectory of U.S.–Iran discussions, because meaningful progress there is essential before disrupted energy flows can realistically resume," ING analysts said in a note on Thursday.
Gulf countries' crude oil and condensate exports were largely steady in July and remained about 40% below pre-war levels, shipping data showed.
Meanwhile, Yemen's Iran-aligned Houthis said on Wednesday they had launched a missile attack on a Saudi oil tanker off the coast of the kingdom's Red Sea port city of Yanbu and another missile attack on a Saudi oil tanker in the Gulf of Aden. There was no confirmation from Saudi Arabia on either incident.
Takashima said concerns that Houthi attacks could hit Red Sea shipping were limiting optimism about the outlook for an end to shipping disruptions in the Middle East.
Separately, U.S. crude stocks rose as refineries eased processing slightly and imports edged higher, data from the Energy Information Administration showed on Wednesday.
