Oil back to pre-war levels as Hormuz traffic rebounds, US tries to reassure Gulf allies

Oil prices fell to pre-war levels on Thursday as the United States said flows through the Strait of Hormuz ​were nearing normal and its top diplomat wrapped up a Gulf tour aimed at winning support for a preliminary Iran deal.

US Energy Secretary Chris Wright said shipments through the strait ‌were approaching levels seen before the US and Israel launched strikes on Iran on February 28, with at least 20 million barrels exiting the strait in the previous 24 hours.

During the conflict, Iran took effective control of the vital chokepoint, disrupting oil flows and rattling global energy markets and the wider economy.

Despite the recovery in traffic, Iran signalled it would continue to assert control. The Revolutionary Guards on Thursday warned vessels to stick to routes through the strait designated by Tehran, rejecting newly announced shipping ​routes not coordinated with Iran as unacceptable and dangerous.

The warning came after Oman announced temporary shipping lanes through the strait in coordination with the United Nations' shipping agency.

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Data from the UN's International ​Maritime Organisation showed that 57 ships carrying about 1,100 seafarers have transited the strait since June 23 under the evacuation plan.

US Secretary of State Marco Rubio sought ⁠to reassure Gulf allies wary of Washington's preliminary accord with Tehran.

After meeting with Gulf Arab foreign ministers in Bahrain — home to the US Navy's Fifth Fleet — he told reporters that Gulf allies shared some serious concerns ​and that they wanted to be informed of every step of the peace accord, which includes provisions on the Strait of Hormuz.

If Iran threatens or blocks ships in the strait, "then we're going to have a problem", Rubio ​said, having earlier told ministers that "no country on Earth has the right to charge for the use of international waterways" and that shipping fees would never be part of any deal.

Badr bin Hamad Al Busaid, the foreign minister of Oman, which lies across the strait from Iran, told the meeting that future shipping arrangements should not involve tolls.

Trump faces republican criticism

The diplomatic push comes as US President Donald Trump faces growing criticism at home over the Iran war.

In a closed-door meeting ​with fellow Republicans on Wednesday, Trump clashed with Senator Bill Cassidy, shortly before his administration asked Congress for tens of billions of dollars to pay for the conflict.

Several Republicans who attended said Trump engaged in ​a shouting match with Cassidy, who said the administration needed to explain the framework deal Trump signed last week that gives Iran financial incentives but falls short of the goals he laid out at the war's beginning.

"It does not ‌appear, although ⁠I don't know for sure, that the course of this is going the way that we were told," Cassidy told reporters.

In a move seen as supportive of Trump, Senate Republican leaders scheduled a late-night vote to block a resolution seeking to end hostilities with Iran. The Senate voted 50 to 47 to stop the war powers measure, which had advanced procedurally in May.

"This vote puts Iran on notice," Trump said on social media after Wednesday's vote, although it does not affect the earlier vote.

Iran war weighs on Trump’s republicans

The war is weighing heavily on Trump ahead of the November elections that will determine control of Congress. Just one in four Americans believes ​the war was worth its costs, a Reuters/Ipsos poll ​showed.

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Conflicting accounts have emerged over elements of the ⁠framework deal, which has prompted criticism of Trump at home and abroad.

Iran's top negotiator, Mohammad Bagher Ghalibaf, said on Thursday that the US assertion that Iran would spend its unfrozen assets to buy US agricultural products was false.

Disagreements also persist over financial incentives for Iran, nuclear inspections, control of the Strait of Hormuz and Israel's parallel war ​in Lebanon.

The deal sets up 60 days of talks to tackle thornier issues, such as Iran's nuclear programme.

Regional scepticism

The deal has provoked scepticism in the ​Middle East, where many states ⁠came under attack from Iran during the war and view it as too generous to Tehran, including a $300 billion fund and the easing of some sanctions.

Washington's Gulf allies fear the reconstruction fund could help Iran rebuild its military. Rubio said he did not discuss the fund with Gulf ministers on Thursday. The accord also does not address Tehran's ballistic missile capacity.

Under the agreement, Iran must allow shipping to move freely through the Strait of Hormuz for 60 days, and ⁠Tehran has ​suggested it might impose tolls after that. Washington and its Gulf allies oppose such fees.

Conflict in Lebanon

On Thursday, senior Israeli and Lebanese officials ​denied there had been any Israeli withdrawal from occupied southern Lebanon, after a US official said Israel had pulled some of its troops back in a good-faith gesture.

Israel has been battling Hezbollah in Lebanon since the group attacked Israel on March 2 ​in support of Iran, and Tehran has made a cessation of hostilities there central to its demands in any lasting peace deal with the United States.