Global oil prices have fallen about 20% from their 2026 highs as investors become increasingly optimistic about the prospect of a long-term cease-fire deal between the United States and Iran that would allow ships to pass through the Strait of Hormuz.
brent crude oil Shares fell 1.2% to $92.56 as of 11:18 a.m. London (6:35 a.m. ET) on the final trading day. The international price index fell by about 19% in May, the worst month since the coronavirus pandemic, and is now down about 20% from its 2026 peak.
On the other hand, the U.S. west texas intermediate Futures prices have fallen 16.5% since the beginning of the month and were last seen on Friday, down almost 1.9% to $87.18.
Energy prices have soared since the war began on February 28th. Offshore oil is now largely unable to pass through the Strait of Hormuz, a key shipping route between Iran and Oman that accounted for about 20% of the world’s energy supplies before the conflict.
The United States and Iran are believed to have “nearly agreed” on the terms of a 60-day memorandum of understanding to extend the ceasefire, but the deal still needs President Donald Trump’s approval.
Despite the new prospects for peace, the attacks continued on Thursday, with Iranian forces firing ballistic missiles into Kuwait and flying attack drones into the strait.
UBS pointed to the attack and said there is “still little evidence” that shipping traffic and energy flows through the region will improve in the short term.
UBS analysts led by Henri Patrico, executive director of oil and gas sector equity research, said in a note that crude oil loadings in the Gulf remain “extremely low.”
UBS said Iranian crude oil loadings in May remained below 300,000 barrels per day, a significant decrease compared to April’s average of 1.5 million barrels per day and March’s average of 1.7 million barrels per day.
Brent crude oil.
Bob Parker, senior adviser at the International Capital Markets Association, said oil prices were likely to remain between $90 and $100 “for at least the next few months” until there was more clarity on the nature of a permanent peace deal, warning that investor skepticism about the negotiations was “inevitable.”
“I think it’s fair to say that even if the Strait of Hormuz does open, it will only be partially open,” Parker told CNBC’s “Squawk Box Europe” on Friday.
He also highlighted “significant” damage to infrastructure, refineries and pipelines across the Gulf as a result of the war, as well as security challenges to tanker traffic and continued inventory depletion.
—CNBC’s Ritika Gupta and Jordan Butt contributed to this article.
