Vessels at the Strait of Hormuz, as seen from Musandam, Oman, July 26, 2026. REUTERS/Stringer
July 30 (Reuters) - Oil prices settled lower on Thursday after a volatile session, as traders digested proposed plans for a Saudi Arabia-led maritime coalition to boost defense cooperation around the Red Sea.
Saudi Arabia seeks to lead a coalition to boost defense cooperation in the Bab El-Mandeb Strait, the Red Sea and the Gulf of Aden. The Saudi defense ministry said 14 states including Turkey, Pakistan, Egypt, Sudan and Djibouti have issued a joint statement in support of the proposed multinational maritime defense coalition.
Brent futures settled down $1.71, or 1.88%, at $89.03 a barrel. Trade was choppy and Brent touched a session high of $93.31 after Washington and Tehran traded strikes on each other's military targets again. U.S. West Texas Intermediate crude futures settled down 87 cents, or 1.03%, at $83.59, after hitting a high of $85.94.
Iran-aligned Houthi militants in Yemen declared a naval blockade last week on Saudi Arabia, threatening the Red Sea route for its oil exports, an alternative to the largely blockaded Strait of Hormuz.
"There is this sense that there is a lot of supply waiting to hit market once all of this is resolved, and that is a weight against any kind of dramatic price rise," said John Kilduff, partner at Again Capital.
Iran and Oman continued talks on the management of the Strait of Hormuz, according to the Iranian Labour News Agency. On Wednesday, a senior Iranian official said Iran had ruled out Oman's proposal for regional joint management of the waterway.
"The fact that Oman is in talks with Iran could suggest that progress is being made on re-opening the Strait of Hormuz," said Hamad Hussain, senior climate and commodities economist at Capital Economics.
The strait, which normally handles around a fifth of global oil and liquefied natural gas flows, has remained a focal point for oil markets since the U.S. and Israel launched the war on Iran on February 28.
"Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere — hope for diplomacy is welcome, but the market is pricing in the reality of ongoing strikes," said Tim Waterer, chief market analyst at KCM Trade.
MIDDLE EAST CONFLICT WIDENS
The U.S. military said it had hit dozens of Islamic Revolutionary Guard Corps targets in Iran in an operation launched after Tehran fired ballistic missiles at U.S. forces in the Middle East.
No U.S. aircraft were destroyed or damaged in the recent attempted Iranian attacks, the U.S. military said on Thursday, denying a claim it said was made by Iran's Revolutionary Guards that three U.S. F-35 jets and three other aircraft were destroyed.
"That lowers temperature on the situation," said Again Capital's Kilduff.
A drone caused a fire that engulfed two gas vessels at Egypt's Mediterranean port of Damietta, the Egyptian cabinet said on Thursday, confirming that the blaze which erupted a day earlier was the result of an attack rather than an accident.
Egypt has secured alternative sources to cover its energy demands after the attack, Prime Minister Mostafa Madbouly said later on Thursday.
Yemen's Iran-aligned Houthis attacked Saudi Arabia this week from Iraqi territory in coordination with Iraqi armed groups, according to assessments by Saudi Arabia and regional partners, reflecting growing coordination among Iran-aligned militias, two officials in the region said.
The attacks included strikes on oil facilities in Saudi Arabia's eastern province, the kingdom's main crude hub.
In another blow to supply, tankers planned for loading at the Caspian Pipeline Consortium (CPC) terminal are heading away from the Black Sea after a vessel was hit during loading at the terminal on Thursday, two sources said and shipping data showed.
A Ukrainian drone attack caused a fire at Lukoil's Perm refinery that damaged and forced the shutdown of one of its crude distillation units, two industry sources told Reuters.
"Given the disruption to flows through several maritime chokepoints, as well as the rapid depletion of oil inventories, prices could feasibly be even higher than where they sit currently," Capital Economics' Hussain added.
Reporting by Georgina McCartney in Houston, Anushree Mukherjee, Enes Tunagur in London, Mohi Narayan in New Delhi and Colleen Howe in Beijing; Editing by Nia Williams, Nick Zieminski and David Gregorio
Our Standards: