Global oil prices fell sharply on Monday as prospects of a peace deal between the United States and Iran grew, even as senior US officials warned that negotiations remained incomplete.
Brent Crude dropped by more than five per cent on Monday, bringing the world’s primary International oil benchmark to $94.88 per barrel during the session.
The dominant US contract, West Texas Intermediate, also fell over five per cent, trading at $91.22 as markets responded to diplomatic developments over the weekend.
US President Donald Trump spoke positively about the negotiations, saying discussions were “constructive” and focused on “final aspects and details”, while also telling negotiators “not to rush” toward a conclusion.
“Both sides must take their time and get it right,” Trump wrote in a social media post, striking a measured tone despite the elevated expectations building in financial markets.
Secretary of State Marco Rubio had suggested over the weekend that an announcement could arrive within hours, but on Monday he struck a more cautious note while speaking to reporters in Delhi, India.
Rubio said it “takes a little while to hear back from Iran”, tempering the earlier optimism and drawing a more measured picture of where negotiations actually stood at that point.
Iran’s foreign ministry spokesman pushed back on parts of the US briefings, acknowledging progress on “a large portion of the issues” but denying that any imminent signing of a deal was close.
Rubio described the proposals under discussion as “pretty solid in terms of their ability to open up the Strait of Hormuz”, and pointed to a “very real, significant, time-limited negotiation on the nuclear matter” as ongoing.
Iran’s enriched uranium stockpile remains a key sticking point between Washington and Tehran, with US media reports suggesting Iran may be prepared to surrender the stockpile, though Iranian sources have denied those claims.
Trump separately posted on his Truth Social platform: “The deal with Iran will either be a great and meaningful one, or there will be no deal.” The post also attacked Democrats and critics opposing the negotiations.
The potential deal has drawn opposition from within Trump’s own Republican Party, with Senator Ted Cruz calling it a “disastrous mistake” and Senator Lindsey Graham raising concerns about Iran’s continued regional influence.
Graham, a Trump ally, said allowing Iran to remain a dominant regional force “makes one wonder why the war started to begin with”, reflecting unease among some conservatives about the terms being discussed.
Warren Patterson, head of commodities strategy at ING, noted that “while talks continue, vessels are still trickling through the Strait of Hormuz”, cautioning against reading too much into the headlines at this stage.
Patterson added: “We’ve been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting to these headlines.”
Iran said around 33 vessels transited the strait over the weekend after receiving approval, with the country granting safe passage to ships sailing under the flags of allied nations during the ongoing stand-off.
Direct attacks on Iran by Israel and the United States began in late February, with the effective closure of the Strait of Hormuz from early March stoking widespread energy supply concerns globally.
Around a fifth of the world’s seaborne crude oil and liquified natural gas typically passes through the chokepoint between Iran’s southern coast and Oman, with an estimated 800 ships currently stranded in the Gulf.
Brent Crude reached as high as $126 per barrel in April as hostilities lingered and undermined expectations of a swift resolution to the conflict between the US, Israel and Iran.
Any sustained decline in oil prices would relieve pressure on inflation across the broader economy, and renewed hopes for a deal carry particular significance ahead of the summer travel season given concerns over jet fuel supply.