LONDON (Reuters) – Oil prices fell more than 4% to two-week lows on Monday as optimism grew that the United States and Iran were moving closer to a peace deal, even though they remain at odds over key issues such as blockades on the Strait of Hormuz.
Brent crude futures were down $4.44, or 4.3%, to $99.10 a barrel at 0822 GMT, while U.S. West Texas Intermediate futures were at $92.24 a barrel, down $4.36, or 4.5%. Both contracts touched their lowest since May 7 earlier in the session.
On Saturday, U.S. President Donald Trump said Washington and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz, which carried a fifth of global shipments of oil and liquefied natural gas before the conflict.
However, the two sides remain at odds over several difficult issues, with Trump saying on Sunday he had told his representatives not to rush into any deal.
“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.
Both sides played down hopes for an imminent breakthrough on Monday, with U.S. Secretary of State Marco Rubio saying there will either be a good agreement or Washington would deal with Iran in “another way.”
Iran’s foreign ministry spokesperson Esmaeil Baghaei said on Monday that Iran was negotiating an end to the war and was not currently discussing nuclear issues.
Analysts expect a return to normal oil flows through the strait will take months, while damaged oil and gas facilities are repaired.
“We continue to believe that the key factors for the oil market to watch should be the physical oil flows and so far, flows through the Strait remain restricted,” UBS analyst Giovanni Staunovo said.
Two liquefied natural gas tankers were exiting the Strait on Monday, heading to Pakistan and China, while a supertanker with Iraqi crude left the Gulf for China on Saturday after being stranded for nearly three months, shipping data showed.
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.
The rig count, an early indicator of future output, rose by seven to 558 in the week to May 22, its highest since June 2025. Even so, Baker Hughes said the total count was still down eight rigs, or 1%, from this time last year.
