Global oil prices have tumbled by around 20% from 2026 highs as investors have grown increasingly optimistic on prospects for a long-lasting ceasefire deal between the U.S. and Iran, which would unlock shipping through the Strait of Hormuz.
Brent crude was down 1.2% on the final trading day of the month, at $92.56, as of 11:18 a.m. in London (6:35 a.m. ET.). The international price benchmark has plunged almost 19% in May, having suffered its worst month since the Covid-19 pandemic, is now off about 20% from its 2026 peaks.
Meanwhile, U.S. West Texas Intermediate futures prices have fallen 16.5% month-to-date, and were last seen almost 1.9% lower on Friday at $87.18.
Energy prices have skyrocketed since the war began on Feb. 28. Seaborne crude has largely been prevented from passing through the Hormuz Strait — the critical shipping lane between Iran and Oman, which accounted for about 20% of global energy supply before the conflict.
The U.S. and Iran are understood to have “mostly agreed” on the terms of a 60-day memorandum of understanding to extend the ceasefire, though the deal still needs sign-off from President Donald Trump.
Despite renewed prospects for peace, strikes continued Thursday, with Iranian forces firing ballistic missiles at Kuwait and sending attack drones towards the Strait.
Noting the attacks, UBS said there is still “little evidence” of any short-term improvement in vessel traffic or energy flows through the region.
In a note, UBS analysts led by Henri Patricot, executive Director, equity research, oil and gas sector, said crude loadings inside the Gulf remain “extremely low.”
Iran crude loadings for May remain below 0.3 million barrels per day, down sharply on April’s average of 1.5 million barrels a day, and March’s 1.7 million barrels a day, UBS noted.
Brent crude.
Bob Parker, senior advisor at the International Capital Markets Association, said oil prices will likely remain between $90 and $100 “at least for the next couple of months” until there is greater clarity on any lasting peace agreement, warning of “inevitable” investor skepticism towards the negotiations.
“Even if the Strait of Hormuz is opened, I think it’s fair to say that opening will only be partial,” 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, coupled with ongoing security challenges for tanker traffic as well as depleted inventories.
— CNBC’s Ritika Gupta and Jordan Butt contributed to this story.
