Oil Prices Fall as Markets Await U.S.-Iran Peace Deal Decision

Oil prices moved lower on Friday as investors closely monitored developments surrounding a potential U.S.-Iran peace agreement. Market sentiment weakened after U.S. President Donald Trump stated that he would meet with senior officials to make a final decision regarding the proposed deal, creating uncertainty across global energy markets.

Brent crude futures for August delivery declined 0.9% to $91.87 per barrel, while U.S. West Texas Intermediate (WTI) crude for July delivery also fell 0.9% to $88.09 per barrel. The decline added to significant monthly losses, with both benchmarks heading toward their first monthly drop since the Middle East conflict began in late February.

Investor optimism over a possible diplomatic breakthrough has eased concerns about global oil supply disruptions. Hopes that shipping traffic can safely resume through the Strait of Hormuz, one of the world’s most important energy transit routes, have helped reduce risk premiums in crude oil prices.

President Trump said the proposed agreement would require Iran to permanently abandon nuclear weapons ambitions, reopen the Strait of Hormuz without charging tolls, and remove naval mines from the waterway. In exchange, the United States would lift its naval blockade of Iranian ports and coastlines. Trump also suggested the U.S. would assist in eliminating Iran’s enriched uranium stockpiles.

However, Iranian officials disputed several aspects of Trump’s statements. Iran’s Fars News Agency described the remarks as a combination of accurate and inaccurate claims, while state media reported that no formal negotiations had yet taken place regarding Tehran’s nuclear program. Reports also indicated that a White House Situation Room meeting ended without a final decision.

Despite ongoing tensions, oil prices have retreated sharply throughout May. Market participants increasingly believe that diplomatic progress could prevent a prolonged disruption to global energy supplies. Brent crude is on track for a monthly decline exceeding 19%, marking its steepest drop since March 2020. WTI crude is set for a fall of more than 16%, its largest monthly loss since April 2025.

Meanwhile, higher energy costs continue to influence inflation expectations. Recent U.S. economic data showed that core Personal Consumption Expenditures (PCE) inflation accelerated in April, partly reflecting the impact of elevated gasoline prices. Analysts at JPMorgan estimate that a 50% increase in oil prices could raise core PCE inflation by approximately 0.3% to 0.4%, highlighting the ongoing connection between energy markets and broader economic conditions.