Oil prices have plummeted: what’s happening on the global market
25 May 08:42Global oil prices plummeted to a two-week low amid expectations that the U.S. and Iran may be nearing a peace deal. The market reacted to signals that the Strait of Hormuz—through which a significant portion of global oil supplies passed before the war began—might be reopened. This was reported by CNN and Reuters, according to "Komersant Ukrainian"
According to Reuters, oil prices fell by about 6% amid optimism regarding a potential agreement between Washington and Tehran. Brent fell to $97.69 per barrel, while U.S. WTI fell to $90.85 per barrel.
Why oil prices fell
The main reason for the price drop is anticipation of a possible deal between the U.S. and Iran, which could pave the way for the resumption of normal traffic through the Strait of Hormuz.
It is precisely the uncertainty surrounding this route that has kept oil prices high in recent months. One of the world’s key energy corridors passes through the strait, so any signals regarding its possible reopening immediately impact the market.
What’s happening with Brent and WTI
Oil futures plummeted following news of diplomatic progress.
| Oil grade | Dynamics |
|---|---|
| Brent | down by approximately 4–6% |
| WTI | down by approximately 4–6% |
| Market level | two-week low |
According to Reuters data, Brent lost $5.85, falling to $97.69 per barrel, while WTI fell by $5.75 to $90.85 per barrel.
The Strait of Hormuz remains a key factor
The Strait of Hormuz is one of the most important maritime routes for the global oil market. Blocking it or restricting traffic immediately creates risks for energy supplies and puts pressure on prices.
According to Western media reports, a potential agreement between the U.S. and Iran could include the reopening of the strait. This has been one of the main factors driving market optimism.
However, analysts warn: even if an agreement is reached, it may take time for oil flows through the Strait of Hormuz to return to normal.
What analysts are saying
MST Marquee analyst Sol Kavonik noted that, despite the risks and caveats regarding the peace deal and the Strait of Hormuz, the market saw a signal of short-term relief for oil prices.
According to Reuters estimates, traders remain cautious, as negotiations have repeatedly broken down or sent mixed signals. Additionally, it could take months to fully restore flows and repair damaged oil and gas facilities.
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What could the price of oil be going forward?
According to CNN, JPMorgan analysts expect the average oil price to remain around $97 per barrel through the end of the year if the Strait of Hormuz reopens in early June.
However, future trends will depend on several factors:
- whether a framework agreement is signed between the U.S. and Iran;
- when the Strait of Hormuz will actually reopen;
- whether supplies will be fully restored;
- how long it will take to repair the energy infrastructure;
- whether sanctions will remain in place;
- whether there will be a new escalation in the Middle East.
Possible US-Iran Deal: What We Know
According to US media reports, the parties are discussing a framework agreement aimed primarily at ending the war and gradually reopening the Strait of Hormuz.
Donald Trump stated: The U.S. will not rush to finalize an agreement with Iran, as key details are still being discussed.
The potential agreement could include an extension of the ceasefire, the gradual reopening of the strait, negotiations on Iran’s nuclear program, sanctions relief, and the unfreezing of some Iranian assets if conditions are met.
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