Meanwhile, Iran claims it will clear the strait of mines, while Washington says the job is done: File Image/Pixabay 

Although oil traders on Wednesday were said to be in “wait and see mode” with regards to the chance of an Iran/Oman proposal to reopen the Strait of Hormuz, crude prices logged a third straight session of losses, with Brent declining 3 percent to almost $86 per barrel, and West Texas Intermediate dropping 2.8 percent to $80 per barrel.

The Iran/Oman project would create  a temporary shipping route through the Strait after undertaking a joint initiative to clear away mines; the deal would also close a UN-authorized southern shipping route along Oman’s coast, which Iran has opposed.

But the veracity of the scenario set out by the Islamic republic and Oman was questionable in light of Washington repeatedly stating that the U.S. military had removed or detonated all mines in the Strait and “every square inch” of the waterway was being monitored, according to U.S. president Donald Trump.

Plus, Wednesday’s continuation of crude price drops seemed to indicate that traders were ignoring Iran’s vow to retaliate against the U.S. sanctions imposed earlier this week: Tim Waterer, chief market analyst at KCM, remarked, "Iran still retains the ability to respond by disrupting shipping, which continues to keep a residual premium in the oil price."

Kpler reported Wednesday that “Strait crossings remain subdued” and disclosed that just five vessels transited the strait in the previous session, down from seven on Monday and nine on Sunday.

This dovetailed with Crux Investor analyst Ryan Charles earlier writing that traders seemed to be ignoring the fact that “Supply-side offsets are already close to exhausted.”

Still, Wednesday's trading could be described as optimistic and was also buoyed by news that Washington was preparing to send U.S. diplomats back to Middle East embassies that were evacuated before and during the war with Iran; to some, this suggested that Trump wasn’t planning a resumption of military actions against Iran.

In other oil news on Wednesday, Sumit Ritolia, manager, modelling refinery and oil markets at Kpler, told media that India’s imports of Russian crude oil for this month were set to decline to about 2 million barrels per day (bpd), compared to an all-time high in July of 2.8 million bpd.

The pullback was attributed to several factors, including Ukrainian attacks on Russia’s oil infrastructure, and China intensifying its buying of cheaper Russian crude.