Oil prices fell to their lowest levels in two weeks on Monday amid growing optimism that the United States and Iran are moving closer to a peace deal, despite lingering disagreements over key issues such as the blockade on the Strait of Hormuz. Brent crude futures dropped by $4.71, or 4.55%, to $98.83 a barrel, while US West Texas Intermediate fell $4.57, or 4.73%, to $92.03 a barrel. Both contracts touched their lowest points since 7 May during the session.
The decline in oil prices came after US President Donald Trump said on Sunday that he had instructed his representatives “not to rush into” any agreement with Iran, tempering hopes of an imminent breakthrough. Trump stated that the US blockade on Iranian ships in the Strait of Hormuz would “remain in full force” until a deal is signed. He also defended the proposed agreement against criticism from fellow Republicans, claiming it would be “the exact opposite” of the nuclear deal negotiated by Barack Obama.
Despite Trump's cautious remarks, a senior administration official indicated that Iran had agreed “in principle” to reopen the Strait of Hormuz in exchange for the US lifting its naval blockade and to dispose of its highly enriched uranium. However, there was no immediate confirmation from Iran. Iranian sources told Reuters that “feasible formulas” could be found in future talks to resolve the uranium dispute.
The prospect of a deal also boosted stock markets, with Nasdaq futures rising 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 and British pound gained 0.3% and 0.4% respectively. The Australian and New Zealand dollars also advanced.
Meanwhile, Israeli strikes continued in Lebanon despite a ceasefire, with the health ministry reporting two deaths, including a paramedic from a Hezbollah-affiliated committee. Israeli Prime Minister Benjamin Netanyahu said he and Trump agreed that any final deal with Iran must eliminate the nuclear threat entirely, and that Trump reaffirmed support for Israel's right to defend itself against all threats.
