Crude oil markets experienced significant declines on Monday, with prices falling to their lowest levels in two weeks as investors responded to growing expectations that the United States and Iran may be advancing toward a diplomatic agreement, despite ongoing disagreements on critical matters such as blockades affecting the Strait of Hormuz that continue to limit Middle Eastern oil supplies.
Brent crude futures dropped $4.71, representing a 4.55% decline to $98.83 per barrel by 2234 GMT, while U.S. West Texas Intermediate decreased $4.57, or 4.73%, reaching $92.03 per barrel.
Earlier during trading, both oil benchmarks reached their weakest levels since May 7.
Over the weekend, U.S. President Donald Trump announced that Washington and Iran had “largely negotiated” a memorandum of understanding regarding a peace agreement that would result in the reopening of the Strait of Hormuz, a waterway that previously handled one-fifth of worldwide oil and liquefied natural gas shipments before the current conflict.
Nevertheless, significant disagreements persist between the nations on various challenging matters, with Trump stating on Sunday that he had instructed his negotiating team not to rush into any agreement with Iran.
MST Marquee analyst Saul Kavonic commented: “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.”
Market experts anticipate that normalizing oil transportation through the strait and repairing damaged energy infrastructure will require several months to complete.
