Iran Accused The U.S. Of Blocking a Deal To Set Up a Safe Route Through Hormuz. Oil Is Dropping Anyway.

Oil prices declined on Wednesday even though Iran said the U.S. is blocking a deal between Iran and Oman to establish a safe route to transit through the Strait of Hormuz.

Brent crude, the international benchmark, dropped 1.73% at 9:00 a.m. and clocked in at $85.76 per barrel, while West Texas Intermediate, the U.S. benchmark, fell 2.03$ and stood at $80.69 per barrel at the same time.

The Iranian Revolutionary Guard Corps said Tehran and Muscat have reached an agreement on the matter, including fees charged for transit. However, the force said, the deal can't move forward unless the U.S. accepts the conditions.

The U.S. has not made mention of the deal, but President Donald Trump has claimed repeatedly that the Strait of Hormuz is open to transit and said on Tuesday that all mines had been cleared from the waterway.

"I have just been informed by the United States Navy that all mines have been removed and/or detonated from within the International Waters of the Strait of Hormuz," Trump said in a social media post.

"Iran has been notified that any ship or boat placing new mines will be immediately and systematically destroyed. Through Space Force, we are watching every square inch of the Strait, as we are, also, with Pickaxe Mountain and the already destroyed three other Nuclear sites. There is a Zero Tolerance policy on mine placement in full force and effect," he added.

The Trump administration also unveiled a plan to impose secondary sanctions on those "enabling" Iran to maintain its economic activity this week.

Treasury Secretary Scott Bessent said the plan is called "Operation Economic Outcast" and appeared to say China could be reached by the measures.

"We want to make clear here today that no one is above the reach of U.S. sanctions," he said when asked if the measures could impact Chinese banks or the Trump administration would refrain from doing so to preserve relations with Beijing.

"If they facilitate transactions and are part of the ecosystem that turns Iranian oil into money, into repression, they will be targeted," he added. Chinese President Xi Jinping is set to meet with President Donald Trump in September.

Iranian parliament speaker Mohammad Bagher Qalibaf appeared to acknowledge the impact of economic pressure last week, saying military might alone is not enough to move the country forward.

"No matter how much military power we have, if people are hungry and we don't have financial circulation, economic growth and domestic production, we will not endure," Qalibaf said in a meeting with Iranian and Iraqi business leaders at the Iranian embassy in Baghdad.

He went on to say that economic stability and security are inseparable. "If we establish security but do not sustain it through the economy, it will not last," he added, also accusing the U.S. and Israel of conducting what he described as "cognitive" warfare.