Oil prices fell to two-week lows on Monday, driven by optimism that the United States and Iran are moving closer to a peace deal, despite ongoing disagreements over key issues such as the blockade of the Strait of Hormuz. Brent crude futures dropped $4.71 (4.55%) to $98.83 a barrel, while US West Texas Intermediate fell $4.57 (4.73%) to $92.03 a barrel, both hitting their lowest points since 7 May.
US President Donald Trump said on Sunday he had instructed his representatives “not to rush into” any agreement with Iran, downplaying hopes of an imminent breakthrough. He stated that the US blockade on Iranian ships in the Strait of Hormuz would remain in full force until a deal is signed. Iran’s semi-official Tasnim news agency reported that Washington continues to obstruct parts of a potential deal, including Tehran’s demand for the release of billions of dollars in frozen oil revenues.
Despite the cautious tone, Trump had earlier indicated on Saturday that Washington and Tehran had “largely negotiated” a memorandum of understanding to reopen the Hormuz strait, with final details to be announced shortly. A senior Trump administration official, speaking anonymously, said Iran had agreed “in principle” to open the strait in exchange for the US lifting its naval blockade and to dispose of its highly enriched uranium. There was no immediate confirmation from Iran.
The prospect of a deal also boosted stock markets, with Nasdaq futures up 1.2% and Japan’s Nikkei jumping 3%. The US dollar slipped against major currencies, falling 0.2% against the yen to 158.87 yen, while the euro rose 0.3% to $1.1642 and the British pound gained 0.4% to $1.3485. However, many global markets were closed for holidays, thinning liquidity.
Israeli Prime Minister Benjamin Netanyahu said he and Trump agreed that any final deal with Iran must eliminate the nuclear threat entirely. Meanwhile, Israeli strikes continued in Lebanon despite a ceasefire, with the health ministry reporting two deaths, including a paramedic from a Hezbollah-affiliated committee. Hezbollah’s chief expressed hope for an Iran-US agreement that would end the war and include Lebanon.
