Oil prices extended their decline on Thursday as hopes of renewed Middle East diplomacy raised expectations that the Strait of Hormuz could reopen, easing concerns over prolonged supply disruptions.Brent crude fell 0.5 per cent to $87.43 a barrel, heading for a fourth straight session of losses, while US West Texas Intermediate crude dropped 0.5 per cent to $81.86, on track for a fifth day of declines.The selling followed reports that Iran and Oman were working to finalise an agreement concerning the Strait of Hormuz, a critical energy route that handled oil and gas shipments equivalent to about one-fifth of global fuel consumption before the conflict began.Qatar’s prime minister is also due to travel to Iran on Thursday to revive diplomatic talks aimed at ending the nearly six-month-old conflict. The US has halted attacks on Iran for about a month, while seeking greater economic pressure on Tehran.However, uncertainty over the waterway remains. Iran has indicated that Hormuz would not fully reopen unless the US meets its conditions under a ceasefire arrangement that later broke down. Analysts said the continued risk to shipping means a war premium could remain embedded in oil prices.Supply concerns are also emerging in diesel markets. US 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 US Energy Information Administration.
