On Monday, oil prices declined by 6 percent to their lowest levels in two weeks. This turn was driven by growing optimism that the United States and Iran may be progressing toward a peace agreement. Despite persistent disagreements over critical issues including blockades in the Strait of Hormuz, the prospect of a diplomatic resolution has begun to influence market sentiment. Brent crude futures fell by 5.7 percent, to USD 97.69 per barrel, while West Texas Intermediate dropped 6 percent, to USD 90.85 per barrel. Both benchmarks touched their lowest points since May 7 earlier in the trading session.
On Saturday, U.S. President Donald Trump stated that Washington and Tehran had “largely negotiated” a mutual understanding toward a peace deal that would reopen the Strait of Hormuz. Prior to the conflict, this strategic waterway had accommodated approximately one-fifth of global shipments of oil and liquefied natural gas. According to an analyst at MST Marquee, despite the considerable caveats and risks that remain regarding both the peace deal and the strait, there is now some light at the end of the tunnel, which is expected to provide near-term relief for oil prices.
Nevertheless, significant obstacles persist. President Trump indicated on Sunday that he had instructed his representatives not to rush into any agreement with Iran, underscoring that the two sides remain divided on several difficult issues. Warren Patterson, head of commodities strategy at ING, cautioned that the market has witnessed similar stages before, only for negotiations to collapse.
Consequently, he suggested that traders are likely to exercise greater caution and avoid overreacting to current developments. Analysts generally anticipate that restoring normal oil flows through the strait will take months, particularly as damaged oil and gas facilities require extensive repairs. Priyanka Sachdeva, an analyst at Phillip Nova, further observed that the longer the crisis persists, the more debatable it becomes whether global leaders genuinely seek a swift resolution to the disruptions.
US Oil Rig Count Rises
In response to sustained higher domestic energy prices, U.S. energy firms have added oil and natural gas rigs for the fifth consecutive week, marking the first such streak since February 2025. According to Baker Hughes, the rig count which is an early indicator of future output, rose by seven to 558 in the week ending May 22, reaching its highest level since June 2025. Even so, the total count remains eight rigs, or approximately 1 percent, below the figure recorded at the same time last year.
