US-Iran pause fuels fresh Hormuz hopes

TEHRAN

Children wade in the water with cargo ships at anchor in the background and a fisherman nearby, in the Strait of Hormuz off Bandar Abbas, Iran, June 30, 2026. (Amirhosein Khorgooi/ISNA via AP File)

Oil prices tumbled on July 27 as a pause in tit-for-tat strikes between the United States and Iran boosted hopes for a return to their ceasefire and negotiations on reopening the Strait of Hormuz.

The United States held fire at the weekend after 13 days of attacks on sites in the Islamic republic, and Donald Trump’s U.N. envoy said the U.S. president was “giving talks some space.”

Tehran said in turn it would stop its retaliatory attacks on regional neighbors, handing Gulf shipping and the oil industry a respite.

The two resumed hostilities this month, breaking a fragile truce, after Iran attacked ships passing through Omani waters in the Strait of Hormuz, sparking a pattern of escalation.

That derailed diplomatic efforts between Washington and Tehran, but the conflict then expanded beyond the vital energy corridor when Iran-backed Houthi rebels in Yemen hit Saudi vessels in the Bab al-Mandeb Strait, a crucial passage into the Red Sea.

Crude prices soared on the flare-up, with Brent breaking back above $100 a barrel last week for the first time since May. News that shipping continued in the Red Sea helped investors pare the gains on Friday.

However, Trump’s decision to hold off on more strikes and Iran’s claims on July 26 that it had made progress in talks with Oman on management of the Strait of Hormuz provided some much-needed relief.

The discussions focused on “common principles and operational mechanisms” for ensuring the safe passage of shipping through the strait while respecting the sovereign rights of the two states, Iran’s Foreign Ministry spokesman Esmaeil Baqaei said.

A report also said mediator Pakistan was looking at resuming U.S.-Iran peace talks, following a push initiated by China.

Meanwhile, Iran’s Foreign Ministry warned on July 27 of “unforeseen” consequences following Ukraine’s attack on an Iranian vessel in the Caspian Sea over the weekend.

“This action by Ukraine was an absolutely illegal and unjustified act, contrary to the Charter of the United Nations, as well as a dangerous act of adventurism that will certainly not go unanswered by us,” Baqaei said in, adding that the consequences of Ukraine’s action “will certainly be unforeseen.”

Iran accused Ukraine on July 25 of attacking one of its merchant vessels in the Caspian Sea, killing a sailor and wounding another.