Global oil prices fell sharply on Monday as hopes grew that the United States and Iran could be nearing a formal peace agreement, easing concerns over supply disruptions.
Brent Crude, the global benchmark, dropped 5% to $98.36 during Monday morning trading in Asia, while US-traded crude fell 5.3% to $91.50 per barrel.
The price moves followed comments from US President Donald Trump on Saturday, who said a deal with Tehran had been “largely negotiated” and that details would be announced soon.
Trump said on Saturday that he had a “very good call” with leaders of Saudi Arabia, the United Arab Emirates, Qatar, and others about a “Memorandum of Understanding pertaining to PEACE”.
“An agreement has been largely negotiated, subject to finalization between the United States of America, the Islamic Republic of Iran, and the various other Countries, as listed,” Trump said in his statement.
“Final aspects and details of the deal are currently being discussed, and will be announced shortly,” Trump added, though he gave no further specifics about the terms of the agreement.
Trump said any agreement would “absolutely” prevent Iran from obtaining a nuclear weapon, and also confirmed a call with Israeli Prime Minister Benjamin Netanyahu that “went very well”.
However, on Sunday Trump appeared to moderate expectations, posting on Truth Social: “Both sides must take their time and get it right. There can be no mistakes!”
Iranian foreign ministry spokesman Esmaeil Baqaei told state television that US and Iranian positions had been converging in the last week, but warned that did not mean agreements would be reached on key issues.
Baqaei also accused the Americans of making “contradictory statements”, signalling that Tehran remains cautious about the pace and direction of negotiations.
Trump had previously indicated any deal would include the reopening of the Strait of Hormuz, the narrow waterway through which around a fifth of the world’s oil and liquefied natural gas normally passes.
The Strait has been effectively closed since the conflict began on 28 February, sending global energy markets into a period of significant volatility and record stock depletion.
Iran threatened to attack ships attempting to use the Strait in retaliation for US and Israeli strikes on the country, and also launched attacks on Israel and US-allied Gulf states including Saudi Arabia, Bahrain and the UAE.
A ceasefire was agreed in early April, after which Washington and Tehran entered formal talks aimed at securing a longer-term peace settlement.
Saul Kavonic, head of energy research at MST Financial, said: “There is now some light at the end of the tunnel, which will bring some near term oil price relief.”
Kavonic cautioned that a resolution would not immediately ease pressure on energy markets, given the scale of damage sustained since the conflict began in late February.
“But even in the most optimistic scenario from here, oil markets will remain tight through 2027 given the time required to normalise oil flows through the Strait, repair damaged oil facilities, and rebuild global oil stocks that have seen record depletion since the war began,” he said.
UK and US energy and financial markets remained closed on Monday due to public holidays, limiting trading activity and liquidity across both economies.