TLDR
- Crude benchmarks tumbled on Sunday following Trump’s announcement that a US-Iran agreement would be revealed “shortly”
- Brent crude plunged 4.9% to $98.45 per barrel; WTI declined 5.4% to $91.38
- The critical Strait of Hormuz waterway has remained blocked since late February, eliminating approximately 1 billion barrels from worldwide supply
- Major obstacles persist, including Iranian frozen funds and Tehran’s nuclear ambitions
- American energy companies increased drilling rigs for five consecutive weeks, marking the longest expansion since February 2025
Crude oil prices experienced a significant decline Sunday and continued falling Monday following President Trump’s statement that Washington and Tehran were nearing a peace agreement to restore access through the Strait of Hormuz.
Brent crude plummeted 4.9% to reach $98.45 per barrel. West Texas Intermediate declined 5.4% to settle at $91.38. Both major oil benchmarks recorded their weakest performance since May 7.
Trump declared on Saturday that an understanding had been “largely negotiated” and would receive an official announcement in the near future. He shared the development on Truth Social, noting the arrangement remained subject to completion among the US, Iran, and multiple other nations.
By Sunday, Trump moderated his tone. He stated the US would avoid hasty decisions and emphasized that time was “on our side.” He subsequently clarified that a final agreement “isn’t even fully negotiated yet.”
Secretary of State Marco Rubio indicated additional announcements could emerge Sunday, though US officials informed Bloomberg the administration wasn’t prepared to finalize any documents.
What’s Still Holding Up a Deal
The two nations continue to disagree on multiple critical matters.
Tehran has demanded the release of its frozen funds currently held by the US Treasury Department. Washington has declined this request thus far. Iran’s Supreme Leader Ayatollah Mojtaba Khamenei also declared last week that Iran’s nuclear stockpiles cannot leave the country, directly contradicting an established American precondition.
Iran’s foreign ministry characterized negotiations as reaching the “final stage” of preparing a memorandum of understanding. However, state-controlled media warned the agreement could still fail.
Should an agreement materialize, it may encompass a comprehensive ceasefire, reopening of the Strait of Hormuz, and incremental relaxation of sanctions targeting Iranian crude exports. Nuclear concerns would be addressed through subsequent negotiations.
Why the Strait of Hormuz Matters
The Strait of Hormuz facilitated approximately one-fifth of global oil and liquefied natural gas transportation before hostilities commenced in late February.
Since its closure, worldwide markets have forfeited roughly 1 billion barrels of crude, according to the International Energy Agency. This represents the most substantial supply disruption in recorded history.
Market analysts indicate that even with a signed agreement, restoring normal petroleum flows could require several months as infrastructure undergoes repairs.
“We’ve reached this juncture previously, only to witness negotiations collapse,” said Warren Patterson, head of commodities strategy at ING. “The market will likely be more cautious about overreacting.”
MST Marquee analyst Saul Kavonic suggested there is now “some light at the end of the tunnel,” though significant risks persist.
In the United States, energy producers expanded oil and gas drilling operations for the fifth consecutive week. The rig count increased by seven to reach 558 during the week ending May 22, representing its strongest level since June 2025. Baker Hughes observed the total remained 1% below year-ago levels.
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