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Oil
prices declined sharply on 25 May 2026 after US officials announced that the
United States and Iran had agreed in principle on a peace deal to reopen the
Strait of Hormuz.
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Final
approval of the agreement is still pending and could take several days.
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The
proposed deal would reopen the Strait of Hormuz between Iran and Oman.
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The
waterway normally handles nearly one-fifth of global oil supplies and a major
share of natural gas trade.
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A US
official said Iran would also agree to dispose of its highly enriched uranium
under the agreement.
·
Iranian
authorities and state media had not officially commented on the proposed terms.
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Brent
crude prices fell around 5% to nearly $95 per barrel for August delivery.
·
West
Texas Intermediate (WTI) crude also dropped around 5% to about $92 per barrel
for July delivery.
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US
stock markets remained closed on Monday due to the Memorial Day holiday.
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Futures
linked to the S&P 500 indicated a potential 0.9% rise when trading resumes.
·
Asian
stock markets mostly traded higher due to expectations of easing energy costs.
·
Japan
and Taiwan recorded gains of around 3%.
·
South
Korean and Hong Kong markets were closed for holidays.
·
European
markets posted modest gains.
·
The
Stoxx 600 index and Germany’s DAX rose less than 1%.
·
London
markets were closed for a holiday.
·
US
gasoline prices declined marginally to an average of about $4.51 per gallon,
according to AAA.
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Despite
the decline, gasoline prices remain about 51% higher than before the conflict.
·
Diesel
prices also edged lower to around $5.60 per gallon but remain roughly 49% above
pre-war levels.
·
Analysts
warned that supply disruptions may continue for an extended period even if the
agreement proceeds.
·
Bob
Savage of BNY stated that markets are currently focusing more on conflict
resolution than renewed escalation.
·
However,
he noted that the consequences for global energy supplies could remain
prolonged.
·
Continued
volatility in oil prices is feeding into inflation expectations globally.
·
Analysts
believe stronger-than-expected inflation data in the United States could
encourage the Federal Reserve to consider additional interest rate increases.
·
The
proposed US-Iran agreement has temporarily eased fears of a prolonged global
energy crisis.
·
However,
uncertainty remains over:
o Final approval of the deal
o Security of shipping routes
o Mine clearance operations
o Long-term stability in the Gulf region
·
The
crisis continues to highlight the global economy’s vulnerability to disruptions
in critical energy transit routes like the Strait of Hormuz.
Oil prices fell sharply on Monday
(25.05.2026) after American officials said that the United States and Iran had agreed
in principle to a peace deal that would reopen the Strait of Hormuz. But final approval
of a deal could take days.
The deal would reopen the waterway between
Iran and Oman, a vital trading route for oil and natural gas that normally carries
up to one-fifth of the world’s oil supply. In addition, Iran would commit to disposing
of its highly enriched uranium, said a U.S. official.
Iran’s leaders and official state media have
not publicly commented on what a potential agreement would say or what is being
discussed.
·
The price of
Brent crude, the global benchmark for oil, was down about 5 percent, to around $95
a barrel, for August delivery.
·
West Texas
Intermediate crude, the U.S. benchmark, also fell 5 percent, to around $92 a barrel,
for July delivery.
·
Markets in
New York were closed on Monday for the Memorial Day holiday. Futures on the S&P
500 pointed to a 0.9 percent
increase when stocks resume trading on Tuesday.
·
Stocks in Asia,
where countries import vast quantities of oil and gas, were mostly trading higher,
with the biggest gains coming in Japan and Taiwan, where shares were up about 3
percent. Stock markets in South Korea and Hong Kong were closed for a holiday.
·
In Europe,
stocks edged higher. The Stoxx 600, a broad index that tracks the region’s largest
companies, and the DAX in Germany both rose less than 1 percent. The London Stock
Exchange was closed for a holiday.
·
Gas prices
fell slightly on Monday, to a national average of roughly $4.51 a gallon, according
to the AAA motor club. But since the war began, the cost for drivers has risen by
51 percent.
·
Gas prices
don’t move in lock step with crude, usually trailing increases or drops by a few
days.
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The average
price of diesel also dropped slightly, to $5.60 on Monday, but remain up about 49
percent since the start of the war.
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The markets
are focused on a resolution to the war, not a re-escalation, “but the supply ramifications
are now also expected to be more prolonged,” Bob Savage, the head of markets macro
strategy at BNY, wrote in a research note.
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Volatility
in oil markets is “feeding directly into inflation expectations,” he wrote, and
if the Federal Reserve’s preferred inflation gauge, set for release on Thursday,
is firmer than expected, the central bank could be more amenable to raising interest
rates.