Global crude oil prices tumbled by more than five per cent on Monday after renewed optimism over a possible United States-Iran agreement raised expectations of easing supply disruptions and a gradual reopening of the Strait of Hormuz.
As at the time of writing 04:40 am (WAT), Brent crude, the international benchmark, dropped 5.52 per cent to $97.82 per barrel, slipping below the critical $100 mark, while West Texas Intermediate (WTI) crude fell 5.91 per cent to $90.89 per barrel, according to Oilprice.com market data.
The sharp decline followed reports that negotiations aimed at reopening the Strait of Hormuz and stabilising the Middle East conflict had entered their final phase. The market reaction intensified after indications emerged that US President Donald Trump believes major aspects of the proposed arrangement have largely been agreed, fuelling expectations of a possible diplomatic breakthrough.
According to Oilprice.com, the proposed deal would seek to reopen the Strait of Hormuz, extend the ceasefire, end the conflict and advance discussions around Iran’s nuclear programme. The initial framework reportedly includes a 60-day extension of the ceasefire during which shipping activity through the vital oil corridor would gradually resume.
However, market optimism was tempered by mixed signals from Washington. Trump reportedly instructed negotiators “not to rush into a deal,” while a senior US administration official said that although progress had been made, an agreement would not be signed immediately.
Further signs of potential supply normalisation emerged from Iran. Iranian news agency Tasnim reported that vessel movements through the Strait of Hormuz could return to pre-war levels within 30 days if negotiators secure an agreement. The waterway remains one of the world’s most strategic energy chokepoints, handling a significant share of global crude and LNG trade.
Despite the steep sell-off, analysts cautioned that a final agreement alone may not immediately restore market stability. Damaged oil and gas infrastructure across the region could take time to recover, while concerns over future disruptions to shipping traffic may continue to sustain a geopolitical risk premium in global oil markets.
The proposed arrangement is also expected to include an end to hostilities involving Israel and Hezbollah, although Israeli Prime Minister Benjamin Netanyahu has maintained that “any final agreement with Iran must eliminate the nuclear danger.”
For oil markets, the latest price plunge underscores how rapidly sentiment continues to swing between fears of prolonged supply shortages and hopes of diplomatic resolution, with traders closely tracking every signal from Washington, Tehran and the wider Middle East.