Oil prices fall as Gulf ministers prepare to meet Iran amid Hormuz tensions

Brent crude futures slipped 2.9% to $104.52 a barrel on Friday following news that foreign ministers of the Gulf Cooperation Council (GCC) will meet their Iranian counterpart on Monday. The meeting, the first since the United States and Israel began hostilities with Tehran, coincides with ongoing negotiations between Oman and Iran on a temporary arrangement to manage vessel traffic in the Strait of Hormuz.

The United States maintains a naval blockade that prevents Iranian oil exports, while Iranian drone and missile strikes have limited the ability of other exporters to resume pre-conflict volumes. An Iran-Oman shipping deal would not fully reopen the strait, as Tehran insists the United States first honor the terms of a cease-fire agreement reached in June.

"For Iran and Oman it is about getting the GCC on board to try and use that to get the U.S. to lift its blockade on Iranian ports," a source told the Financial Times, adding that the GCC wants any agreement to be temporary and to ensure ship movements.

GCC members remain cautious about any arrangement that could be seen as recognizing Iranian control over Hormuz. Meanwhile, the U.S. military has been facilitating non-Iranian oil shipments through the strait, raising regional exports to about two-thirds of pre-war levels, but still leaving a significant shortfall.

Iran has responded with missile launches at U.S. bases, attacks on warships, and support for Houthi forces in Yemen, which have recently seized territory near the Bab al-Mandab Strait. The closure of Hormuz has forced Saudi Arabia to divert oil through its East-West Pipeline to the Red Sea, a route that has also come under attack.

Saudi Crown Prince Mohammed bin Salman reportedly sought U.S. strikes against the Houthis, but the United States indicated it would limit its role to providing intelligence and targeting data, focusing on Iran and Hormuz rather than opening a new front. Pakistan, a Saudi defense partner, has refrained from military action, citing concerns over its own energy imports that rely on the same maritime routes.