Oil Prices Drop Sharply on Hopes of US-Iran Peace Deal

BBC Business reported Monday that oil prices tumbled sharply as traders reacted to signals that a US-Iran deal could be close. The prospect of a reopened Strait of Hormuz drove the selloff in early Asian trading.

Oil Benchmarks Post Their Steepest Drop in Months

Global benchmark Brent crude fell roughly 5% to around $98 per barrel. US-traded crude dropped more than 5% to approximately $91.50. Both markets had been elevated for months amid the ongoing conflict. UK and US financial markets were closed Monday for public holidays, limiting broader market reaction.

Trump Signals a Deal Is Within Reach

US President Donald Trump posted on social media Saturday that an agreement with Tehran had been “largely negotiated.” He said final details were still being worked through and would be announced soon. Trump added that he had spoken with leaders of Saudi Arabia, the UAE, and Qatar, describing a framework for peace. He also confirmed a call with Israeli Prime Minister Benjamin Netanyahu that he said went well. Any agreement, Trump insisted, would block Iran from acquiring a nuclear weapon. However, he tempered expectations Sunday, urging his negotiating team to take their time and avoid errors.

Iranian foreign ministry spokesman Esmaeil Baqaei acknowledged that the two sides had been moving closer in recent days. But he cautioned that convergence did not guarantee resolution on core issues and accused Washington of making contradictory statements.

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How the Strait of Hormuz Crisis Began

The Strait of Hormuz has been effectively closed since late February, when the conflict between Iran and US-Israeli forces escalated. Iran threatened to strike vessels attempting to transit the narrow waterway in retaliation for military attacks on its territory. Tehran also struck targets in Saudi Arabia, Bahrain, and the UAE. A ceasefire was reached in early April, since when diplomatic talks have been underway. The strait is a critical chokepoint, with roughly one-fifth of global oil and LNG supply normally passing through it each year.

Also Read: Middle East Tensions Keep Energy Markets on Edge

Analysts Warn Relief May Be Temporary

Energy analyst Saul Kavonic of MST Financial told BBC Business there was now “light at the end of the tunnel” for near-term oil price relief. He cautioned, however, that even an optimistic outcome would leave markets tight through 2027. Restoring normal oil flows, repairing infrastructure, and rebuilding depleted global inventories would all take considerable time, he said.

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