U.S. crude oil posted a steep weekly loss after Tehran and Washington held talks on the sidelines of the U.N. General Assembly in New York City, a development that briefly raised expectations for a diplomatic thaw in one of the world's most sensitive energy corridors.
West Texas Intermediate, the U.S. benchmark, fell 2.3% on the day to close at $92.41 a barrel. Brent crude, the global benchmark, declined 2.1% to settle at $104.32. For the week, U.S. crude finished 7.9% lower, while Brent ended flat, underscoring how sharply sentiment shifted around the possibility of progress in talks involving Iran and the United States.
The market reaction reflected the central role of the Strait of Hormuz in global oil flows. The narrow waterway at the mouth of the Persian Gulf is one of the world's most important energy chokepoints, and any hint of reduced tensions there can quickly ripple through futures markets. Traders have long treated the strait as a geopolitical pressure point, with prices often reacting to even tentative signs that shipping risks could ease or intensify.
Iranian Foreign Minister Abbas Araghchi told reporters Thursday at the U.N. that Tehran had offered to open the Strait of Hormuz in seven days if the United States meets the conditions in an interim peace deal reached in June. Araghchi said Iran is prepared to restart talks aimed at a final agreement if Washington implements the conditions laid out in the memorandum of understanding.
"We are waiting for a response from the U.S.," Araghchi told reporters, adding, "I think it would be much better if it is done before the midterm election, but it depends on the U.S. administration to decide. We are not in a hurry."
The comments injected a fresh diplomatic variable into a market already sensitive to supply disruptions, sanctions policy and the broader balance between geopolitical risk and demand concerns. Yet the path from tentative dialogue to durable de-escalation remains uncertain. The June memorandum of understanding quickly collapsed as fighting broke out over transit rights through Hormuz, raising questions about whether the current proposal would be enough to prevent a repeat of the same breakdown.
That uncertainty is central to why oil prices did not stage a more sustained rally despite the apparent opening. Investors are weighing not only the possibility of a deal, but also the fragility of any arrangement that depends on compliance, verification and political will from both sides. The fact that the earlier understanding unraveled so quickly has left traders wary of pricing in a lasting resolution.
Still, the mere prospect of talks has been enough to pressure crude lower over the week, particularly in the U.S. market. A nearly 8% weekly decline in WTI is significant in a market that has been highly reactive to headlines from the Middle East. Brent's relative stability suggests that global traders are still waiting for clearer evidence that the diplomatic channel can produce a concrete change in shipping conditions or supply risk.
The timing of Araghchi's remarks also added a political dimension. By saying it would be better for the issue to be resolved before the U.S. midterm election, he signaled that Tehran sees a narrow window for progress, even as he emphasized that Iran is not rushing. That combination of urgency and patience may be intended to keep pressure on Washington while preserving room for negotiation.
For now, the market is left with a familiar pattern: a high-stakes geopolitical issue, a tentative diplomatic overture, and a commodity market trying to determine whether the latest talks represent a real breakthrough or just another brief pause in a long-running confrontation. Until there is a clearer answer from Washington, oil traders are likely to keep treating the Strait of Hormuz as both a risk premium and a potential source of relief.