BY COMFORT OGBONNA
Global oil prices tumbled nearly 6% on Monday, falling to their lowest levels in two weeks as growing optimism over possible peace talks between the United States and Iran eased fears of prolonged supply disruptions in the Middle East.
Brent crude futures dropped $5.85, or 5.7%, to $97.69 per barrel by 0343 GMT, while U.S. West Texas Intermediate crude fell $5.75, or 6%, to $90.85 a barrel. Both benchmark contracts touched their weakest levels since May 7 earlier in the trading session as investors reacted to signs that diplomatic negotiations may be advancing.
The sharp decline came after U.S. President Donald Trump said over the weekend that Washington and Tehran had “largely negotiated” an understanding on a possible peace agreement that could eventually lead to the reopening of the Strait of Hormuz. The critical waterway had previously carried nearly one-fifth of the world’s oil and liquefied natural gas shipments before conflict in the region disrupted flows and triggered a global energy shock.
Markets have remained highly sensitive to developments involving the Strait of Hormuz because of its central role in global energy trade. Any threat to shipping through the narrow passage immediately impacts oil supply expectations and drives volatility across financial markets.
The latest comments from Trump fueled hopes that tensions between the two countries may finally begin to ease after months of military escalation and economic uncertainty. Investors responded by rapidly pulling back from risk-driven oil trades that had pushed prices sharply higher in recent weeks.
Energy analysts said the possibility of renewed oil flows through the strait could provide short-term relief to global markets that have struggled with soaring fuel costs and inflationary pressure since the outbreak of the conflict.
“Notwithstanding all the caveats and risks that remain to the peace deal and Strait of Hormuz, there is now some light at the end of the tunnel, which will bring some near-term oil price relief,” said Saul Kavonic, an analyst at MST Marquee.
Despite the market optimism, significant obstacles remain before any final agreement can be reached. Trump said on Sunday that he had instructed U.S. representatives not to rush negotiations with Iran, signaling that several major disagreements still need to be resolved.
Diplomatic observers say disputes over security arrangements, sanctions, and shipping guarantees in the Strait of Hormuz remain among the key sticking points in the talks. Analysts also warned that previous rounds of negotiations between Washington and Tehran have collapsed unexpectedly, making traders cautious about assuming a quick resolution.
“We’ve been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting,” said Warren Patterson, head of commodities strategy at ING.
Experts believe that even if a peace framework is finalized soon, the return of normal oil flows through the region may take considerable time. Several energy facilities and shipping routes have suffered damage during the conflict, while insurers and transport companies are expected to remain cautious until security conditions improve substantially.
Analysts noted that repairing damaged oil and gas infrastructure across the region could take months, limiting how quickly supply conditions can normalize. Some also questioned whether all major global powers involved truly want a rapid end to the disruptions.
“The longer the crisis stretches, the more debatable it becomes whether world leaders genuinely want a quick end to disruptions,” said Priyanka Sachdeva, an analyst at Phillip Nova.
The recent fall in oil prices also comes as U.S. energy producers continue increasing drilling activity in response to earlier price surges. Higher domestic energy prices encouraged companies to add oil and natural gas rigs for the fifth consecutive week, marking the longest stretch of increases since February 2025.
According to Baker Hughes, the total U.S. oil and gas rig count rose by seven to 558 during the week ending May 22, reaching its highest level since June 2025. However, the total remains slightly below the level recorded during the same period last year, suggesting producers are still being cautious despite stronger prices earlier in the year.
Market analysts said investors are now closely monitoring both diplomatic developments and production trends to determine whether oil prices will stabilize or remain volatile in the coming weeks.
“Momentum indicators suggest markets are attempting to stabilise after last week’s aggressive selloff, but conviction remains weak,” Sachdeva added.
The recent decline in crude prices could provide some relief for consumers and businesses worldwide that have been struggling with elevated fuel and transportation costs. However, analysts caution that markets remain highly fragile, and any setback in negotiations between the United States and Iran could quickly send prices rising again.
For now, traders appear focused on the possibility that easing geopolitical tensions could eventually restore stability to global energy supplies, even as uncertainty continues to dominate the broader outlook for oil markets.
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