Oil prices tumble as Oman and Iran make an unexpected move

Oil prices tumble as Oman and Iran make an unexpected move

Charley Blaine

Wed, August 26, 2026 at 6:07 PM GMT+3 4 min read

There comes a time in an oil-price cycle when the narrative breaks. What's happening in oil markets now may be one of those times.

Oil prices fell hard on Aug. 25 on a flimsy reason. Officials from Oman and Iran announced they agreed to establish "a temporary joint maritime corridor" in the Strait of Hormuz. They said they planned to implement "a joint project" to clear mines from the strait.

The Strait is the key waterway through which, before war erupted in March, as much as 20% of the world's oil has flowed every day.

Related: Why Bessent's Iran strategy looks like a work in progress

That does not mean an opening of the corridor will be established soon and that the mine-clearing is about to start. But apparently they're talking.

That was enough to push Brent crude, the global benchmark, down 3.9% to $88.58 per 42-gallon barrel. Light sweet crude, the benchmark U.S. crude, fell 3.1% to $82.36 a barrel on Aug. 25. That is a 6.2% decline for Brent and a 5.4% decline in U.S. crude since Aug. 21.

If you really want to see a big drop, we offer up the price for Murban crude, the benchmark crude produced by Abu Dhabi National Oil Company. Murban was down 8.6% to $92.71 a barrel, according to Oilprice.com.

The oil-price drop helped stocks generally move higher. Except for one group: energy stocks. The Energy Select Sector SPDR exchange-traded fund (XLE) fell 1.7%.

The excitement may have been juiced a bit by reports that the U.S. economic pressure on Iran may be "more likely to lead to negotiations than military escalation," The Wall Street Journal said.

Meanwhile, The New York Times said the State Department was preparing to send envoys back to the Middle East.

If all that is true and the lower prices hold, it should mean gasoline prices are about to head lower.

'This whole thing is a mess'

"If all that is true" is the operative question. Oil, stock and even bond prices have moved up and down wildly as traders large and small try to make quick trades and profits. The latest news was greeted with skepticism.

"This whole thing is a mess," Amrita Sen, founder and director of market intelligence at Energy Aspects, a global consulting firm, told CNBC.

U.S. average prices are still holding above $4 a gallon, according to GasBuddy.com and AAA Fuel Prices. Crude oil prices are still more than 40% higher than they were in December.

The problem with the Persian Gulf War is nothing has been predictable, and accuracy of details has been suspect.

President Trump announced the war against Iran waged by the United States and Israel was over after the first week and Iran was begging for a deal.

Iran has been defending itself with lots of missile and drone attacks on its Persian Gulf neighbors and on U.S. military facilities in the region.

More Oil & Gas:

A veteran trader's 'bit of reality'

The U.S. says 8 million-to-9 million barrels of oil per day is getting shipped out of the Persian Gulf, but commodity trader Carly Garner of DeCarley Trading in Las Vegas, Nev., says that figure is "probably too optimistic." If it wasn't, she added in a note to clients, "we would probably see much higher prices."

Lately, the U.S. and President Trump have been trying to find a way out of the war. Trump is worried about how Republicans will fare in the November midterm elections.

The latest strategy, championed by Treasury Secretary Scott Bessent: Impose long-standing Iranian sanctions on any country or anyone who does business with Iran.

That includes China. China has already told the U.S. it won't stop buying Iranian oil and will take "all necessary measures" to protect its national interests.

China buys about 80% of Iran's oil exports. It is also a key economic partner with the United States.

So, the game will go on.

But "markets get tired of war headlines," Garner said. This happened in 2022 after the Russia-Ukraine War erupted and pushed oil prices to all-time highs. The price top came late June of that year.

Related: Bessent's $40 trillion debt answer puts Fed rate hike in focus

This story was originally published by TheStreet on Aug 26, 2026, where it first appeared in the Economy section. Add TheStreet as a Preferred Source by clicking here.