LONDON, May 25 – Global oil prices dropped sharply on Monday, falling to their lowest levels in two weeks as optimism over a potential agreement between the United States and Iran eased fears surrounding disruptions to global energy supplies.
Brent crude futures fell $5.85, or 5.7%, to $97.69 per barrel, while U.S. West Texas Intermediate crude dropped $5.75, or 6%, to $90.85 per barrel in early trading.
Both benchmarks touched their weakest levels since early May as markets reacted to signs of possible progress toward a broader agreement that could reopen the strategically important Strait of Hormuz.
On Saturday, Donald Trump said Washington and Iran had “largely negotiated” an understanding on a peace arrangement that could lead to the reopening of the Strait of Hormuz.
The waterway had previously carried roughly one-fifth of global seaborne oil and liquefied natural gas shipments before disruptions linked to the conflict.
Market participants viewed the comments as potentially easing immediate supply concerns that had pushed oil prices sharply higher in recent weeks.
Analysts, however, warned that significant uncertainties remain.
Several issues continue to divide both sides, including questions surrounding shipping restrictions and broader geopolitical tensions.
Trump later indicated that negotiations should not be rushed, signaling that a final agreement remains uncertain.
Analysts at ING cautioned that markets have previously reacted strongly to signs of diplomatic progress only for negotiations to later break down.
Market participants therefore appear likely to remain cautious before fully pricing in a sustained normalization of energy flows.
Analysts also noted that even if a deal is reached, restoring full oil and gas exports through the Strait of Hormuz could take several months because of infrastructure repairs and operational disruptions.
Meanwhile, higher energy prices have continued to encourage increased production activity in the United States.
According to energy services company Baker Hughes, U.S. oil and gas companies increased drilling activity for a fifth consecutive week.
The total active rig count rose by seven to 558 during the week ending May 22, reaching its highest level since June 2025.
Despite the increase, overall drilling activity remains slightly below levels recorded a year earlier.
The recent decline in oil prices could provide some relief to energy-importing economies, including several African countries that have experienced rising inflation and mounting pressure on fuel costs following the recent surge in global energy markets.
