Qatar urges Hormuz reopening as oil drops 5% on US-Iran talks

Qatar's foreign ministry said parties are working to de-escalate the Middle East conflict and reopen the Strait of Hormuz, a waterway carrying about 21 percent of global oil trade, even as no deal has been reached. The push comes as US President Donald Trump said negotiations with Iran would begin Monday after shelving planned military strikes.

"Our current priority is to resume negotiations, which requires ensuring a ceasefire and reopening the Strait of Hormuz," Majed Al-Ansari, spokesperson for Qatar's foreign ministry, said at a Doha press conference.

Oil prices fell sharply on the diplomatic turn, with Brent crude dropping about 5 percent, or more than $4 a barrel, as Trump said talks would focus on the strait and Iran's denuclearisation. OPEC+ agreed to raise production quotas by about 188,000 barrels a day from September, completing the reversal of voluntary cuts. Iran, however, said it is not negotiating directly with Washington and that the strait will not reopen until US attacks stop.

The stakes are high for global energy markets. If the strait remains closed beyond mid-2027, the UK economy could contract 0.2 percent in 2027, according to EY forecasts, while an earlier reopening would lift growth to 1.2 percent. Qatar and Pakistan are expected to act as intermediaries in the talks.

Hormuz Reopening Hinges on Ceasefire

Iran's foreign ministry said reaching an agreement with Oman on a temporary safe shipping route would not be enough to restore access to the strait, with the cessation of US attacks a prerequisite. The Islamic Revolutionary Guard Corps said it shot down an MQ-9 Reaper drone over the waterway and claimed to have intercepted more than 30 US Reaper drones since the conflict began Feb. 28, a reminder of continued military tensions. Trump claimed Saudi Arabia, the United Arab Emirates, Qatar and Iran urged Washington to halt planned action, which he said would have been "the biggest attack since World War II."

Oil Markets Price a Diplomatic Path

The market reaction has been muted relative to the scale of the threat, with Brent's 5 percent drop reflecting hopes of easing supply disruption rather than panic. Indian benchmark indices gained in early trading, with the Nifty 50 up 0.69 percent and the Sensex advancing 0.72 percent, as cheaper crude lifted sentiment. Shipping through the Bab al-Mandeb strait has also slowed, with 18 vessels passing Sunday, down from 27 a day earlier, after Iran-aligned Houthis announced a maritime embargo on Saudi Arabia on July 20. EY's UK chief economist Peter Arnold said an extended closure into 2027 would raise inflation and could push the economy into contraction next year, while a reopening by September would support growth of 1.2 percent in 2027.

This article is for informational purposes only and does not constitute investment advice.