Oil Prices Drop 6% as US-Iran Peace Hopes Ease Supply Fears

Oil prices fell sharply on Monday, dropping nearly 7% to their lowest level in two weeks after signs emerged that the United States and Iran could be moving closer to a peace agreement.

Brent crude dropped 6.7%, to $94.69 per barrel, while US West Texas Intermediate (WTI) crude fell 6%, to $90.85. Both benchmarks touched their lowest levels since May 7 as traders reacted to hopes of reduced tensions in the Middle East.

US-Iran Peace Talks Weigh on Oil Market

The decline came after US President Donald Trump said Washington and Iran had “largely negotiated” an understanding that could eventually reopen the Strait of Hormuz, a major shipping route for global energy supplies.

Before the conflict, the Strait of Hormuz handled nearly one-fifth of global oil and liquefied natural gas shipments. Any progress toward reopening the route has eased concerns about supply disruptions, pushing prices lower.

However, Trump later signaled caution, saying there was no need to rush a final agreement while the US blockade remains in place.

Analysts Warn Risks Still Remain

Market analysts said investors are hopeful but still careful because earlier diplomatic efforts between the two sides failed to produce lasting agreements.

Experts also warned that even if tensions ease, restoring normal oil flows through the Strait of Hormuz could take months due to damaged energy infrastructure.

US Energy Firms Increase Rig Activity

Meanwhile, US energy companies increased oil and natural gas drilling activity for the fifth straight week. The total rig count rose by seven to 558, its highest level since June 2025, signaling expectations of stronger future production.