Global oil prices fell sharply on Monday, reaching their lowest levels in two weeks, amid optimism that the United States and Iran may be moving closer toward a peace agreement.
According to Reuters:
- Brent Crude futures fell by 4.55% to US$98.83 per barrel
- West Texas Intermediate crude dropped by 4.73% to US$92.03 per barrel
Both benchmarks touched their lowest levels since May 7 during trading.
The decline followed comments by Donald Trump, who said on Saturday that Washington and Tehran had “largely negotiated” a memorandum of understanding aimed at achieving a peace settlement.
A key objective of the proposed agreement would reportedly be the reopening of the Strait of Hormuz, which before the conflict carried roughly one-fifth of global oil and liquefied natural gas shipments.
Despite the positive market reaction, major disagreements reportedly remain between the two sides.
Trump stated on Sunday that he had instructed U.S. negotiators not to rush into any agreement with Iran.
Analysts say the possibility of reopening the Strait of Hormuz has improved short-term market sentiment.
Saul Kavonic of MST Marquee stated that there is now “some light at the end of the tunnel,” which could provide near-term relief for oil prices despite ongoing risks and uncertainties.
However, analysts also cautioned that:
- It may take several months for oil flows through the Strait of Hormuz to fully normalize
- Damaged energy infrastructure across the region could require extensive repairs before supply stabilizes completely
The Middle East conflict and disruptions to energy shipping routes have significantly affected global oil markets, inflation, shipping costs, and currencies across many Asian economies in recent weeks.
