Vance says Iran talks will drag as Brent holds near $80

US Vice President JD Vance said Iran negotiations will be turbulent and time-consuming, even as Tehran and Oman finalize a deal to reopen the Strait of Hormuz, which carries one-fifth of global oil trade.

"Our task is to navigate these complex situations and secure the best outcome for the American people and for the president," Vance said in remarks reported by US media on Aug. 5. "The process will be messy and take time, but oil prices will fall and stay low, Iran will never obtain nuclear weapons, and the US will be in a stronger position."

Iranian Foreign Ministry spokesperson Esmail Baghaei said the agreement with Oman is in the "final stage" of drafting, with a joint statement expected "if certain parties do not obstruct this process." Two regional officials told the Associated Press that negotiators have finalized a draft and await approval from Iran's Supreme Leader Ayatollah Mojtaba Khamenei. President Donald Trump said a breakthrough "could happen. Tomorrow or the next day."

The stakes are substantial. Brent crude traded around $80 a barrel Wednesday, below conflict peaks, as markets weigh the reopening of a waterway that previously moved roughly one-fifth of the world's traded oil and natural gas. Any deal faces hurdles: Washington has rejected proposals allowing Iran to levy transit fees, and Tehran seeks continued influence over the strategic chokepoint.

The proposed arrangement follows a June understanding between Washington and Tehran that sought to end fighting and reopen the waterway but collapsed. Earlier discussions envisioned ships entering the Persian Gulf through an Iranian-controlled route and exiting via an Omani-controlled channel, with security and environmental service fees charged to vessels. The US has repeatedly rejected any agreement allowing Iran to collect such fees.

Regional flashpoints complicate the path

Regional tensions remain elevated even as diplomatic channels open. Yemen's Iran-backed Houthi rebels claimed they fired ballistic missiles toward Saudi-linked oil tankers, while a commercial vessel in the Gulf of Aden reported a nearby explosion, according to the United Kingdom Maritime Trade Operations centre. There was no immediate Saudi confirmation.

The fragile Israel-Hezbollah ceasefire also came under renewed strain after Israel issued an evacuation warning for residents of southern Lebanon's Mansouri village before launching what it called "precise strikes" in response to "a blatant violation of the ceasefire." Diplomatic talks between Lebanese and Israeli negotiators in Rome ended early following the escalation, though a US State Department official said discussions "were extremely productive" and could resume Thursday.

What a Hormuz deal would mean for oil markets

If the agreement is finalized, the immediate impact would be a normalization of shipping flows through a waterway that previously handled roughly one-fifth of the world's traded oil and natural gas. Brent at $80 already reflects partial de-escalation expectations, but a full reopening could push prices lower, particularly if combined with a broader US-Iran nuclear framework.

The last time the Strait of Hormuz faced sustained disruption was during the 2019 tanker attacks, when Brent spiked above $75 before retreating within weeks as supply disruptions proved temporary. The current conflict has been more severe, with shipping severely disrupted and energy prices elevated for months.

Vance's insistence that oil prices "will fall and stay low" suggests the administration expects a deal that includes verified supply normalization. But his acknowledgment that Iranians are "extraordinarily difficult people" reflects the reality that negotiations could still collapse, as the June understanding did.

For markets, the key variable is whether the Hormuz deal proceeds independently of the broader nuclear talks or becomes entangled in them. If the waterway reopens first, oil prices could see a sharp near-term correction. If the nuclear track stalls, the risk premium could re-emerge quickly.

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