Oil Slides Below $90 on Iran Talks Optimism, Fueling Tech-Led Market Rally

Oil prices extended their decline to a sixth week on Thursday, with Brent crude dipping below $90 a barrel for the first time in weeks, as traders piled into risk assets on mounting optimism that the Strait of Hormuz will resume normal operations.

Brent fell as low as $84.56 a barrel earlier in the week, settling at $86.94 Wednesday, before hovering near $87.32 on Thursday, according to trade data. West Texas Intermediate traded below $82 a barrel, bringing its weekly decline to about 6%. Crude remains more than 40% higher this year despite the recent retreat, reflecting six months of disruption since the conflict in the Persian Gulf began.

The catalyst for the sell-off was a New York Times report that the U.S. is preparing to send diplomats back to embassies in the Middle East, signaling Washington does not anticipate a renewal of full-scale conflict with Iran. The report, cited by multiple outlets, coincided with positive signals from Pakistan’s army chief and Al-Arabiya reporting that he carried an offer to lift sanctions under a memorandum of understanding.

Separately, Iran and Oman are working to finalize an agreement concerning the Strait of Hormuz, a critical waterway that handled oil and gas shipments equivalent to about one-fifth of global fuel consumption before the conflict. Qatar’s prime minister is due to travel to Iran to revive diplomatic talks aimed at ending the nearly six-month-old conflict, according to reports.

### Hormuz Flows Recover Toward Prewar Levels

The diplomatic push is already having a tangible effect on energy flows. Bloomberg reported that Kuwait and Qatar are restoring crude exports through the strait, shipping about 70% of the combined 2 million barrels a day they exported before the war. Total oil shipments via tankers have climbed to between 7 million and 8 million barrels a day, up from roughly 4 million barrels a day in mid-July and equal to about 75% of prewar levels, according to sources familiar with Gulf energy flows.

London-based energy analytics firm Vortexa told clients that the estimated seven-day average for oil transiting the Strait of Hormuz has approached 10 million barrels a day. President Donald Trump said on Tuesday that 10 million barrels of oil exited Hormuz that day, adding to the bullish supply outlook.

The United Arab Emirates was the first to resume transiting crude through the strait, using ship-to-ship transfers in the Gulf of Oman. Maritime research firm TankerTrackers reported at least fifteen such transfer sessions on Tuesday, totaling 25 million barrels of crude oil from almost every country in the region except Iran.

Iran’s military said it had reached a revenue-sharing agreement with Oman concerning the Strait of Hormuz, though Tehran stressed that the waterway would not fully reopen unless the U.S. meets conditions under a ceasefire arrangement that later broke down. The U.S. has halted military strikes on Iran for about a month while seeking greater economic pressure, the reports noted.

“It seems crude is now beginning to price in a sooner-rather-than-later peace deal,” Dennis Kissler, senior vice president for trading at BOK Financial Securities, said in a note cited by multiple sources. UBS analyst Justinus Steinhorst wrote that an Iran-Oman framework for a “temporary joint maritime corridor” is pulling oil lower, but added: “It remains difficult to envision how the US would sign off on this given the concurrent ratcheting up of economic pressure.”

### Market Rally Led by Nvidia, AI Stocks

The slide in oil and the broader easing of geopolitical tensions fueled a broad rebound in risk assets, particularly in technology shares. S&P 500 futures climbed 0.4% in early trading, while Nasdaq 100 futures advanced 0.9%, reversing a multi-day losing streak for chipmakers. The S&P 500 added 0.7% on Wednesday, pulling closer to its all-time high, while the Nasdaq composite rose 1.4%.

Nvidia was the strongest force pulling the market higher. The chip giant rose 9% on Wednesday after reporting stronger-than-expected profit and revenue for the spring quarter, and issuing revenue guidance that topped analyst estimates. “AI has reached its inflection point,” Nvidia CEO Jensen Huang said in a statement. “It’s doing useful work. Its tokens are productive and profitable.”

The earnings report helped calm concerns that had built around AI stocks in recent weeks over whether booming demand for chips could fade if the AI revolution does not produce sufficient profit. Nvidia’s gains snapped a seven-session losing streak.

Salesforce jumped 20.9% after reporting it delivered one of its best quarters in history, citing AI demand. CEO Marc Benioff said the company is “seeing incredible demand for our AI and data products” and is “turning AI into customer success at unprecedented scale.” The software giant also raised its full-year revenue forecast and announced an expanded partnership to integrate Anthropic’s Claude chatbot with its platform.

Other technology names advanced. Micron gained 2%, Seagate rose 2%, and Meta Platforms added 0.9% in premarket trading. Nvidia was set to lead the so-called Magnificent Seven higher, with five of the seven stocks posting gains. Alibaba ADRs rose 0.5% after the South China Morning Post reported that founder Jack Ma bought more than $76.5 million worth of the company’s Hong Kong-listed shares.

### Bond Yields Steady, Fed Speech in Focus

Treasury yields held relatively steady as the rally in equities offset lingering inflation concerns. The yield on the 10-year Treasury note edged up to 4.66% Wednesday from 4.64% the prior day, after a report showed the Federal Reserve’s preferred inflation measure remained at 3.7% in July, slightly worse than the 3.6% economists had expected. Consumer spending growth slowed, and the economy grew at a 1.5% annual pace in the spring, according to revised data.

Traders are now focused on a speech by Federal Reserve Chairman Kevin Warsh scheduled for Friday, his first major address since taking office. Warsh has faced criticism for not being forthcoming about his views on the economy, and the market is looking for clarity on the path of interest rates. Current fed funds futures pricing implies nearly a three-in-four chance the Fed will hike rates at least once by year-end, according to CME Group data.

### Russia-Ukraine Risks and Diesel Squeeze

Despite the oil slide, supply risks remain. Ukrainian attacks on Russian refineries and ports have disrupted fuel production, and U.S. distillate inventories, which include diesel and heating oil, fell by 2.2 million barrels in the week to August 21, reaching their lowest seasonal level on record, according to the Energy Information Administration. Diesel crack spreads in the U.S. are still trading above $90 a barrel, having hit an unprecedented $100 last week.

The conflicting signals have left oil markets caught between the prospect of more Middle Eastern supply returning and fresh disruptions to Russian exports. Satellite imagery suggests Saudi Arabia may be increasing oil loadings from within the Persian Gulf as it adapts export routes amid Houthi threats in the Red Sea.

### London Shares Retreat as Energy Majors Decline

Across the Atlantic, London’s benchmark stock index pulled back on Thursday, with energy majors leading declines as the easing of oil-related panic weighed on sector earnings expectations. The FTSE 100 fell as crude’s slide trimmed the value of integrated oil producers such as BP and Shell, according to market reports.

### Commodities, Bitcoin See Mixed Moves

Gold snapped a four-day winning streak, while the U.S. dollar held steady. Bitcoin briefly surged above $80,000 for the first time since mid-May, benefiting from renewed optimism around dollar alternatives after Treasury Secretary Scott Bessent’s intervention in the bond market last week, before paring gains.