Oil fell as the US and Iran tentatively agreed to extend a ceasefire by 60 days, with Brent set for the biggest monthly drop since 2020 on optimism that flows through the Strait of Hormuz may resume.
Brent dropped toward $92 a barrel, down 19% this month, while West Texas Intermediate was below $88. President Donald Trump has yet to agree to the terms of the agreement, according to a person familiar with the matter, after Axios reported that shipping through the strait would be “unrestricted.”
Still, Vice President JD Vance told reporters that it was too early to know “when or if” a deal with Iran would be reached. Earlier, Treasury Secretary Scott Bessent said only that “the teams have been going back and forth,” when pressed if an interim agreement had been clinched.
Crude has weakened in May on speculation some form of accord would be reached, although the warring parties have hailed progress before, only for the stalemate to drag on. During the conflict, the effective closure of Hormuz — which is subject to blockades by Washington and Tehran — has triggered a global energy shock, with millions of barrels of daily oil supply shut off.
“We’re slowly and excruciatingly pulling toward what is being framed as a deal,” said Aaron Stein, president of the Foreign Policy Research Institute. “If it’s an extension of the ceasefire, then nothing fundamentally changes. What will differentiate this from all those that have come before it, is it does seem like there’s at least consensus on the need for a lift-for-lift on the two blockades.”
At this stage, it remains unclear how sticking points in the negotiations — including the Islamic Republic’s nuclear program, Iran retaining control over Hormuz, and sanctions relief — stand to be addressed. The waterway reopening, and Iran turning over highly enriched uranium were Trump’s “red lines” necessary for any pact, Treasury Secretary Bessent said.
Even if a truce extension is agreed, multiple hurdles stand to impede the resumption of oil flows. Among them, mines in the Hormuz waterway must be removed, shut-in fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired. In addition, vessels would take weeks to reach importing nations.
“I would expect flows to remain heavily constrained due to the time lag of tanker travel and time to get production back online,” said Ryan McKay, senior commodity strategist at TD Securities. “We can end up losing another 1 billion barrels of supply during a ‘recovery’ period.”
Data this week highlighted growing tightness in the US as the crisis dragged on. Among the figures, distillate stockpiles sank to the lowest in more than two decades, and holdings of crude at the Cushing, Oklahoma, hub fell for a fifth week to 23 million barrels, pushing them closer to the 20-million-barrel mark that’s generally seen as the minimum operating level.
More stories like this are available on