Oil hits two-week low as US-Iran talks advance

Oil prices fell by more than $5 to two-week lows on Monday, as market optimism grew that the United States and Iran were moving closer to a peace agreement, despite ongoing disagreements over key issues, including restrictions related to the Strait of Hormuz, News.Az reports, citing Reuters.

Brent crude futures dropped $5.09, or 4.9%, to $98.45 per barrel at 0705 GMT, while US West Texas Intermediate (WTI) futures fell $5.22, or 5.4%, to $91.38 per barrel.

Both benchmarks touched their lowest levels since May 7 earlier in the trading session.

On Saturday, US President Donald Trump said Washington and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz. The waterway previously handled around one-fifth of global oil and liquefied natural gas shipments before the conflict.

MST Marquee analyst Saul Kavonic said that despite remaining risks and uncertainties surrounding the agreement and the strait, there was now “some light at the end of the tunnel,” which could provide near-term relief for oil prices.

However, both sides remain divided on several sensitive issues. Trump said on Sunday that he had instructed his representatives not to rush negotiations into a deal.

“We've been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting,” said Warren Patterson, head of commodities strategy at ING.

Analysts also expect that restoring normal oil flows through the strait could take months, particularly while damaged oil and gas infrastructure is repaired.

“The longer the crisis stretches, the more debatable it becomes whether world leaders genuinely want a quick end to disruptions,” said Priyanka Sachdeva, an analyst at Phillip Nova.

In the United States, energy companies responded to higher domestic energy prices by increasing oil and natural gas rigs for a fifth consecutive week, the first such streak since February 2025.

The oil and gas rig count, an early indicator of future production, rose by seven to 558 in the week ending May 22, reaching its highest level since June 2025. However, Baker Hughes data showed the total rig count was still down by eight rigs, or 1%, compared with the same period last year.

Sachdeva added that “momentum indicators suggest markets are attempting to stabilise after last week’s aggressive selloff, but conviction remains weak.”

News.Az 

By Nijat Babayev