Oil prices fall 20% as traders eye U.S.-Iran ceasefire breakthrough
Global oil prices have fallen nearly 20 percent from their 2026 highs as investors become increasingly optimistic about prospects for a long-term ceasefire agreement between the United States and Iran that would pave the way for shipping through the Strait of Hormuz.
Brent crude oil It was down 1.2% at $92.56 at 11:18 a.m. London time (6:35 a.m. ET) on the last trading day of the month. The international price benchmark fell almost 19% in May, its worst month since the Covid-19 pandemic, and is now around 20% off its 2026 peaks.
Meanwhile USA West Texas Intermediate Futures prices have fallen 16.5% since the beginning of the month and were last seen on Friday, down almost 1.9% at $87.18.
Energy prices have increased rapidly since the war began on February 28. Seaborne crude oil has been largely prevented from passing through the Strait of Hormuz, the critical shipping lane between Iran and Oman that accounted for about 20% of global energy supplies before the conflict.
The US and Iran are understood to have “substantially agreed” on a 60-day memorandum of understanding to extend the ceasefire, but the deal still needs President Donald Trump’s approval.
Despite renewed hopes for peace, attacks continued on Thursday, with Iranian forces firing ballistic missiles at Kuwait and sending attack planes into the Bosphorus.
Noting the attacks, UBS said there was still “little evidence” of any short-term improvement in ship traffic or energy flows in the region.
Crude loadings in the Gulf remain “extremely low”, UBS analysts led by Henri Patricot, executive director of equity research, oil and gas sector, said in a note.
UBS stated that Iranian crude oil loadings for May remained below 0.3 million barrels per day, a sharp decrease from the average of 1.5 million barrels per day in April and 1.7 million barrels per day in March.
Brent crude oil.
Bob Parker, a senior adviser to the International Securities Association, warned against “inevitable” investor skepticism about the talks, saying oil prices will likely remain between $90 and $100 “for at least the next few months” until there is more clarity on a permanent peace deal.
“It’s fair to say that even if the Strait of Hormuz is opened, the opening will only be partial,” Parker told CNBC’s “Squawk Box Europe” on Friday.
He also highlighted “significant” damage to infrastructure, refineries and pipelines in the Gulf as a result of the war, as well as ongoing security problems in tanker traffic as well as depleted stocks.
— CNBC’s Ritika Gupta and Jordan Butt contributed to this story.
