Global oil prices have fallen approximately 20% from their 2026 peaks, driven by investor optimism surrounding a potential ceasefire deal between the U.S. and Iran. As of the last trading day of May, Brent crude was priced at $92.56, down 1.2%, while U.S. West Texas Intermediate futures were at $87.18, reflecting a 16.5% decline for the month.
The optimism stems from reports that the U.S. and Iran have largely agreed on a 60-day memorandum of understanding to extend a ceasefire, which, if finalized, could facilitate the resumption of oil shipping through the Strait of Hormuz, a vital route that previously accounted for about 20% of global energy supply.
However, despite the positive outlook, UBS analysts caution that there is still minimal evidence of improved vessel traffic or energy flows in the region, with Iranian crude loadings significantly reduced to below 0.3 million barrels per day in May, compared to 1.5 million barrels per day in April.
Bob Parker from the International Capital Markets Association suggests that oil prices may stabilize between $90 and $100 in the near term, as investor skepticism remains regarding the negotiations and the ongoing security challenges in the Gulf region, which have caused considerable damage to infrastructure and reduced inventories