Oil Prices Fall 20% from 2026 Peak Amid U.S.-Iran Ceasefire Talks

Global oil prices have declined by about 20% from their peak levels in 2026, reflecting increased investor optimism regarding the potential for a permanent ceasefire agreement between the United States and Iran. Such an agreement could reopen shipping routes through the Strait of Hormuz.

Brent crude fell by 1.2% in the final trading day of the month, settling at $92.56 per barrel. The international price benchmark dropped nearly 19% during May, marking its worst monthly performance since the COVID-19 pandemic. This figure places Brent roughly 20% below its highest point in 2026, according to the American network CNBC.

Meanwhile, U.S. West Texas Intermediate (WTI) crude futures have decreased by 16.5% since the start of the month. On Friday, WTI traded down 1.9% to reach $87.18 per barrel.

Energy prices surged sharply following the outbreak of conflict on February 28, which significantly restricted crude oil shipments through the Strait of Hormuz. Prior to the conflict, this strait accounted for approximately 20% of global energy supplies.

Reports indicate that the United States and Iran have agreed on the terms of a 60-day memorandum of understanding to extend the ceasefire, although the deal still requires approval from President Donald Trump.

The American bank UBS noted that there is only "scant evidence" of any short-term improvement in shipping activity or energy flows in the region. UBS analysts, led by Henry Patrico, the executive director of equity research in the oil and gas sector, stated in a research note that crude oil loadings within the Middle East remain "extremely low."

Bob Parker, senior adviser at the International Capital Markets Association, said oil prices are likely to remain between $90 and $100 "for at least the next two months" until the outlook on a permanent peace agreement becomes clearer. He also warned of "inevitable" investor skepticism regarding the negotiations.

Parker told CNBC, "Even if the Strait of Hormuz is reopened, I believe this will only be partial." He added that despite the optimism, markets remain cautious due to ongoing security concerns surrounding shipping movements in the strait.