Oil prices dropped nearly 7% on Monday amid rising optimism about a potential peace deal between the U.S. and Iran, which could reopen the crucial Strait of Hormuz. Brent crude futures fell by $7.24 to $96.30 a barrel, while U.S. West Texas Intermediate saw a decrease of $6.30, reaching $90.88. Trading was subdued due to the U.S. Memorial Day holiday.
Iran’s top negotiator and foreign minister were in Doha discussing a possible agreement with Qatar’s prime minister to end the ongoing war. Both sides reported progress on a memorandum aimed at halting hostilities and giving negotiators 60 days to finalize a deal. Analysts expressed cautious optimism about resuming oil flows through the Strait of Hormuz.
Despite the hopeful developments, experts warned that even if a deal is reached, normal oil production may take months to resume as facilities require repairs. The underlying supply shortfall of 10-11 million barrels per day persists, and markets will continue to draw from inventories until production stabilizes. Recent ship-tracking data indicated some LNG tankers and a supertanker carrying Iraqi crude managed to pass through the strait, but flows remain restricted.
