Global oil prices experienced a significant drop as the United States and Iran moved closer to finalizing a deal, with Brent crude falling 5.2% to $98.12 a barrel and West Texas Intermediate hovering near $92. The Strait of Hormuz, a critical chokepoint for global energy supplies, remains under a dual blockade by both nations, but its reopening appears imminent pending the completion of negotiations.
Trump Cautions Against Rushing Deal
President Donald Trump stated on social media that he would not rush into an agreement, emphasizing that the deal was still under negotiation. Senior U.S. officials indicated that final approval could take several days, while Iran’s Tasnim news agency warned that the draft agreement could collapse due to unresolved disputes over key clauses, including the unfreezing of Iranian assets.
"We expect energy prices, as soon as there’s a deal, to plummet," said Kevin Hassett, Trump’s chief economic adviser.
The crisis, which began in February with U.S. and Israeli military actions against Iran, disrupted millions of barrels of daily crude supplies and sent global energy markets into turmoil. The Strait of Hormuz, which handles approximately 20% of the world’s oil and liquefied natural gas in peacetime, has been a focal point of the conflict.
Economic Pressures Mount
Domestic political pressure has mounted on Trump to resolve the conflict, particularly with midterm elections approaching. Rising fuel costs have further strained American households, with average U.S. gasoline prices reaching their highest levels since 2022 this month. A reopening of Hormuz would provide relief to energy importers across Asia, including China, Japan, and South Korea.
Haris Khurshid, chief investment officer at Karobaar Capital LP, noted that oil markets had been trading on worst-case assumptions, but fears began to ease as talks continued. Trading volumes were lower than usual on Monday due to public holidays in the U.S. and the U.K.