Oil prices fell on Monday after senior U.S. officials issued further positive signals regarding a potential agreement with Iran to reopen the Strait of Hormuz.
Brent crude dropped as much as 6.2% to $97.10 per barrel, while WTI traded around $91 per barrel. U.S. Secretary of State Marco Rubio expressed cautious optimism, stating that the U.S. would do everything possible to resolve the situation diplomatically. "We thought there might be some news last night," he told reporters in New Delhi. "Perhaps there will be today."
U.S. President Donald Trump posted on social media over the weekend that "negotiations are proceeding in an orderly and constructive manner," but added that the U.S. is not in a hurry. He noted that Washington's blockade of the Strait of Hormuz would continue until an agreement is finalized. Senior U.S. officials indicated it could take several days to obtain final approval.
However, it remains unclear how key differences, such as the fate of Iran's nuclear program, will be resolved. Iran's Tasnim News Agency reported that the draft agreement could still fall apart because the U.S. is blocking some critical terms, including Tehran's demand for the unfreezing of assets.
The crisis, which began in February, has disrupted global energy markets. Following U.S. and Israeli strikes on Iran, the conflict quickly spread across the Persian Gulf region, forcing oil-producing nations to take millions of barrels per day of crude supply offline. The Strait of Hormuz, which connects the Middle East to global markets, has faced a dual blockade from Tehran and Washington.
"Both sides may have moved closer on a ceasefire and a framework for reopening the Strait of Hormuz, but significant differences remain on thornier issues," said Charu Chanana, Chief Investment Strategist at Saxo Bank in Singapore, referring to sanctions and the nuclear program. "Oil prices reflect investor relief rather than a lasting solution."
Trading on Monday may have been lighter than usual, with some traders away due to public holidays in the U.S. and the U.K.
At 2:29 p.m. Singapore time, Brent crude for July delivery was down 5.2% at $98.20 per barrel. A close at this level would mark the lowest since late April.
WTI crude for July delivery fell 5.5% to $91.25 per barrel.
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