Oil prices fell by more than $5 during Monday’s trading, hitting their lowest levels in two weeks, as market bets grew that the United States and Iran are moving closer to a potential peace agreement, despite ongoing disagreements over sensitive issues, led by restrictions linked to the Strait of Hormuz.
Brent crude futures dropped by $5.09, or 4.9%, to $98.45 per barrel, while U.S. West Texas Intermediate crude fell by $5.22, or 5.4%, to $91.38 per barrel. Both benchmarks had touched their lowest levels since May 7 earlier in the session, signaling a clear repricing of the geopolitical risk premium in the energy market.
Pressure on prices came after remarks from U.S. President Donald Trump, who said Washington and Tehran had made significant progress in negotiating a peace understanding that could allow the reopening of the Strait of Hormuz, one of the world’s most important energy routes. The strait carried around one fifth of global oil and liquefied natural gas shipments before the conflict began.
Despite these positive signals, markets are still approaching the file with caution, especially as disagreements between the two sides have not yet been resolved. Trump confirmed that he had instructed his representatives not to rush into any agreement, keeping the risk of talks breaking down in place, particularly as markets have seen similar stages before negotiations collapsed.
Analysts expect the return of oil flows through the Strait of Hormuz to normal levels to take several months, given the need to repair damaged oil and gas facilities. The longer the crisis continues, the more doubts grow over whether international parties genuinely want a quick end to the disruptions, which could keep volatility elevated in the energy market.
Meanwhile, U.S. energy companies responded to the recent rise in local prices by increasing the number of oil and natural gas rigs for the fifth consecutive week, marking the first such upward streak since February 2025. The rig count rose by 7 to 558 in the week ending May 22, its highest level since June 2025, although it remained around 1% lower than the same period last year.
Overall, the oil market is trying to regain some balance after the recent sharp selloff, but the strength of any recovery remains limited. Optimism over a possible agreement is pressuring prices in the near term, while any return of tensions or setback in the Hormuz file could quickly bring the risk premium back into the market.
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