Oil Prices Decline as US-Iran Ceasefire Negotiations Advance

Hormuz Strait Oil prices fell on Monday as mediators worked to broker a ceasefire agreement between the United States and Iran.

As of 8:19 AM Eastern Time in the US, the May contract for US West Texas Intermediate crude dropped approximately 1% to $110.45 per barrel; the international benchmark Brent crude price was largely unchanged at $108.76 per barrel.

Four informed sources disclosed to US political news website Axios that the United States, Iran, and regional mediators are discussing a potential 45-day ceasefire agreement, a move that could help permanently end the war.

US President Donald Trump has set a deadline for Iran, demanding it open the Hormuz Strait by Tuesday or face consequences, including potential attacks on its power plants and bridges. On Sunday, Trump used profanity in a social media post warning that Iran would "live in hell" if it did not open the strait.

Subsequently, he posted another message stating "Tuesday, 8 PM Eastern Time!" without further explanation.

Iran has effectively blockaded the Hormuz Strait by attacking oil tankers. This maritime route connects the Persian Gulf with global markets; prior to the conflict, approximately 20% of the world's oil supply transited through this strait.

The blockade has triggered the most severe oil supply disruption in history. Since the conflict began, prices for crude oil, jet fuel, diesel, and gasoline have surged significantly.

In a national address last Wednesday, Trump stated that the conflict would last two to three weeks.

Data from Canadian investment bank TD Securities indicates that by the end of this month, oil supply losses could reach nearly 1 billion barrels, including up to 600 million barrels of crude oil and approximately 350 million barrels of refined products.

In a report to clients on Thursday, Ryan McKay, Senior Commodity Strategist at TD Securities, said, "Current projections suggest the conflict will last at least until the end of April, resulting in increasingly severe calculations of the oil supply shortfall."

Energy consultancy Rapidan Energy stated that, accounting for rerouted oil shipments, emergency reserve releases, and inventory drawdowns, the total net loss of oil and refined products could reach 630 million barrels by the end of June.

On Sunday, eight OPEC+ nations agreed to increase daily production by 206,000 barrels in May. However, with the strait still blockaded, it remains unclear how this oil will reach the global market.

The Kuwait Oil Company reported on Sunday that several of its operational facilities were attacked by drones, sustaining significant damage.

OPEC+ warned that repairing energy infrastructure damaged by Iranian attacks is "not only costly but also time-consuming, thereby affecting overall supply capacity."

The eight OPEC+ nations are Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman.