Oil prices fell 6% to two-week lows on Monday, May 25, 2026, as optimism grew that the United States and Iran were moving closer to a peace deal.
Brent crude futures fell $5.85, or 5.7%, to $97.69 a barrel by 0343 GMT, while U.S. West Texas Intermediate were at $90.85 a barrel, down $5.75, or 6%.
Both contracts touched their lowest since May 7 earlier in the session.
On Saturday, United States President Donald Trump said U.S. and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz, which had carried a fifth of global shipments of oil and liquefied natural gas before 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 MST Marquee analyst Saul Kavonic.
However, the two sides remain at odds on several difficult issues, with Trump saying on Sunday he had told his representatives not to rush into any deal with Iran.
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“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.
Analysts expect a return to normal oil flows through the strait will take months, while damaged oil and gas facilities are repaired.
“The longer the crisis stretches, the more debatable it becomes whether world leaders genuinely want a quick end to disruptions,” Phillip Nova analyst Priyanka Sachdeva told Reuters.
U.S. energy firms responded to higher local energy prices by adding oil and natural gas rigs for the fifth week in a row, for the first time since February 2025.
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