Brent Crude Falls Below $96, Reaches 4-Week Low Amid Growing US-Iran Diplomatic Hopes

Crude Oil Prices Plummet as US-Iran Hopes for Peace Deal Strengthen

On Monday, 25 May, crude oil prices continued to drift lower as hopes of a potential peace deal between the US and Iran strengthened, raising expectations of a reopening of the Strait of Hormuz. This decline marked the seventh consecutive day of falling prices, with Brent crude futures crashing another 7.2% in trade to $95.95 per barrel, marking the lowest level since 23 April. WTI crude futures also fell nearly 7% to the day's low of $89.44 per barrel.

The decline in crude prices accelerated after US Secretary of State Marco Rubio said that the US would give diplomacy every opportunity to succeed before considering dealing with Iran "another way." US President Donald Trump has been signaling that talks are progressing, although he added that the US would not rush into a deal and Washington's blockade of the strait would remain in place until an agreement is finalized.

Over the weekend, Trump said that negotiations were proceeding in an orderly and constructive manner, but warned of fresh attacks if negotiations failed. He reiterated this stance on Monday, stating that talks were "proceeding nicely," but warned of the consequences of a failed deal. President Trump's stance has been a key factor in the recent decline in crude oil prices.

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Meanwhile, Iran's foreign ministry spokesperson Esmaeil Baghaei reportedly said several conclusions had been reached on multiple issues, though that did not necessarily mean both sides were close to a final agreement. Key disagreements continue to cloud the outlook, including the future of Iran's nuclear programme and control over the Strait of Hormuz.

The repeated swings between escalation fears and de-escalation hopes have kept crude oil prices highly volatile. A full reopening of the Strait of Hormuz would provide significant relief to major Asian economies and could push oil prices substantially lower, considering the route carries roughly one-fifth of global oil and LNG shipments.

The closure of the key maritime route forced several major oil-producing nations in West Asia to halt output, adding further pressure on crude prices, with Brent at one point nearing $120 per barrel. Iran claimed that 33 vessels, including oil tankers and container ships, had passed through the strait after obtaining permission from the Islamic Revolutionary Guard Corps Navy. However, the Trump administration has maintained that any toll-based system for passage through the strait would be unacceptable.

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President Trump has been facing growing domestic political pressure to end the conflict, particularly ahead of the November midterm elections that will determine control of Congress. The war has sharply increased fuel costs, with average US gasoline prices climbing to their highest levels since 2022.