Global oil prices tumbled to their lowest levels in over two weeks on Monday as fresh hopes emerged of a breakthrough in U.S.-Iran negotiations that could reopen the strategically vital Strait of Hormuz. The potential easing of tensions between Washington and Tehran sparked a sharp decline in Brent crude and U.S. West Texas Intermediate (WTI) futures, even as analysts warned that full normalization of oil flows could take months or even years.
Benchmark Brent crude futures fell by $4.71, or 4.55%, to $98.83 per barrel, while U.S. WTI dropped $4.57, or 4.73%, to $92.03 per barrel. Both benchmarks touched their weakest levels since May 7 during the session. The decline came after U.S. President Donald Trump said on Saturday that Washington and Tehran had “largely negotiated” a memorandum of understanding toward a peace deal that would allow reopening the Strait of Hormuz—a route that once carried nearly one-fifth of global oil and liquefied natural gas shipments before regional hostilities escalated.
Senior U.S. officials speaking on Sunday clarified that while negotiations are progressing, no agreement has been finalized. They emphasized that final approval could still take several days as negotiators work through precise language on key issues. Meanwhile, Iran’s semi-official Tasmin news agency reported that the draft deal remains fragile and could collapse, citing U.S. blocking of several clauses, including Tehran’s demand for the unfreezing of its assets. Iranian President Masoud Pezeshkian reiterated on Sunday that Iran is not seeking nuclear weapons and is not aiming to destabilize the region, though he did not confirm details of any pending agreement.
The proposed deal reportedly includes a 60-day extension of the existing ceasefire, during which the Strait of Hormuz would be reopened and Iran allowed to resume oil exports. A U.S. administration official stated that Iran has agreed in principle to dispose of its highly enriched uranium, though the timeline and verification mechanisms remain under negotiation. The official also said that sanctions relief would be contingent on Tehran’s compliance with the deal’s provisions, and that no assets would be unfrozen under the current proposal. However, the agreement does not address Iran’s missile stockpile or include an explicit ban on uranium enrichment—two key demands of U.S. negotiators and Republican hawks.
Market sentiment has shifted significantly in recent weeks. Last week, U.S. crude prices slumped over 8%, and Brent fell more than 5%, following Trump’s cancellation of planned airstrikes against Iran to allow more time for diplomacy. Despite the recent pullback, oil prices remain more than 30% higher than levels seen on February 28, the day the U.S. and Israel launched strikes on Iran. Analysts at Morgan Stanley described the oil market as being “in a race against time,” warning that the current factors preventing further price spikes—such as higher U.S. crude exports and softer Chinese demand—may weaken if the Strait of Hormuz remains closed through June.
The Strait of Hormuz remains one of the world’s most critical oil chokepoints, with about 20% of global oil supply transiting the passage before the conflict. Since early March, Iran has enforced a de facto blockade, requiring ships to obtain clearance before passage or face potential targeting. The restrictions followed U.S. and Israeli strikes that killed Iran’s Supreme Leader Ayatollah Ali Khamenei and several senior leaders. Saudi Aramco CEO Amin Nasser warned earlier this month that disruptions in Hormuz could delay stability in global oil markets until 2027, with nearly 100 million barrels of oil supply per week potentially affected.
Trump, in a social media post on Sunday, said negotiations are proceeding “in an orderly and constructive manner” and that the U.S. is in no rush to finalize a deal. He added that the U.S. blockade of the Strait of Hormuz would remain in place until an agreement is completed and both sides take time to “get it right.” Analysts caution that even if a deal is reached, full normalization of oil flows and repairs to damaged energy infrastructure could take months, with long-term impacts on global supply chains and prices.
