Oil Drops as US Touts Progress on Deal Toward Reopening Strait
Oil prices fell as the US and Iran moved closer to a deal, though President Trump said Washington’s blockade of the Strait of Hormuz would stay in place until an agreement is finalized. Brent crude dropped as much as 5.7% to $97.64 a barrel, while West Texas Intermediate fell below $92. Trump also said on social media he would not “rush” a deal that “isn’t even fully negotiated yet,” and senior US officials said final approval could take several days.
Key disagreements remain unresolved, including the future of Iran’s nuclear program. Iran’s Tasnim news agency said the draft could still collapse, claiming the US is blocking key clauses such as a demand to unfreeze Iranian assets.
Energy markets have been disrupted since late February, when the US and Israel attacked Iran. The conflict spread across the Persian Gulf, forcing producers to shut in millions of barrels of crude. The Strait of Hormuz, the key shipping route linking the region to global markets, has faced a double blockade from both Tehran and Washington.
“A lot of oil was trading on worst case assumptions for weeks,” said Haris Khurshid of Karobaar Capital. “But once it became clear talks were still alive and escalation wasn’t accelerating, a chunk of that fear premium comes out pretty fast.”
Brent’s decline marked a fourth drop in five sessions and puts prices near a one-month low. European natural gas also fell as much as 6.3%.
A full reopening of the Strait of Hormuz, which normally handles about a fifth of global oil and LNG flows, would ease pressure on importers in Asia including China, Japan, and South Korea. Traffic remains below prewar levels, though some ships have passed through, including an Iraqi crude supertanker to China that crossed the US blockade line and an LNG tanker bound for India. Iran said 33 vessels have transited with approval from its Revolutionary Guard Navy, while the Trump administration rejected any toll system.
Trump has faced growing domestic pressure to end the conflict ahead of November midterms. The war has pushed US gasoline prices to their highest since 2022. White House adviser Kevin Hassett said energy prices should fall sharply once a deal is reached, potentially opening space for Federal Reserve rate cuts.
Oil trading may also be lighter than usual Monday, with some traders away for US and UK holidays.
