U.S.-Iran Ceasefire Talks Progress as Oil Prices Plunge to Steepest Monthly Drop Since 2020

TLDR

• Brent crude is poised for a 19% drop this month, its most significant since 2020, amid advancing US-Iran ceasefire discussions.
• A provisional 60-day extension of the truce has been agreed upon by the US and Iran, subject to President Trump’s endorsement.
• While maritime traffic in the Strait of Hormuz is still limited, confirmation of an agreement could lead to a return to normal operations.
• Amid the persistent supply crisis, US distillate inventories have plunged to a more than 20-year low.
• Analysts caution that restoring oil flows could require months, even with a deal, because of damaged infrastructure and tanker scheduling challenges.

---

(SeaPRwire) –   Oil markets are experiencing a steep decline this month as traders react to news of a possible extended ceasefire between the US and Iran. On Friday, Brent crude approached $92 per barrel, marking an approximate 19% decrease for May. West Texas Intermediate slid close to $87. Both benchmarks are heading for their most substantial weekly losses in several months.

This price movement follows reports that the US and Iran have outlined a deal to prolong their current ceasefire for 60 days. The agreement still requires President Donald Trump’s approval. Official terms have not been confirmed by the White House.

Vice President JD Vance stated to reporters that it was premature to determine “when or if” an agreement would be finalized. Treasury Secretary Scott Bessent commented simply that “the teams have been going back and forth.”

BREAKING: Iran says the Trump administration is now desperately “requesting an agreement multiple times a day through various channels,” to unilaterally claim a deal has been agreed, with Iran rejecting each of these requests, saying it will not respond until Iran’s terms and…

— The Hormuz Letter (@HormuzLetter) May 29, 2026

What the Strait of Hormuz Has to Do With It

The Strait of Hormuz, a critical maritime passage for a major portion of the world’s oil exports, is central to the crisis. Effective blockades by both nations since the start of hostilities have severed millions of barrels of daily supply, causing a worldwide energy shock.

Shipping activity through the strait continues to be significantly lower than pre-conflict volumes. Even a report from Axios suggesting shipping would be “unrestricted” under the tentative deal has failed to instill complete market confidence.

Oil prices dipped temporarily on Thursday following news of fresh military engagements between US and Iranian forces, later rebounding as diplomatic communications resumed.

Why a Deal Won’t Fix Supply Instantly

Market analysts warn that extending the truce would not lead to an immediate resumption of oil supplies, citing numerous logistical hurdles.

Mines deployed in the Hormuz channel must be removed. Shuttered oil fields could require months to resume operations. Infrastructure impaired by drone and missile attacks needs restoration. Furthermore, tankers would still need several weeks to travel to destination countries.

“I would expect flows to remain heavily constrained due to the time lag of tanker travel and time to get production back online,” said Ryan McKay, senior commodity strategist at TD Securities. “We can end up losing another 1 billion barrels of supply during a recovery period.”

ING analysts observed that markets have largely accounted for a potential resolution. “Any confirmation of a deal that reopens the strait means that further downside is likely limited,” they wrote, but added that stockpiles are now more exhausted than they were before the conflict started.

Data from the US this week indicated crude inventories at the Cushing, Oklahoma hub declined for a fifth straight week to 23 million barrels, nearing the operational minimum of about 20 million barrels. Distillate supplies reached their lowest level in over twenty years.

Major negotiation issues are still pending. These involve Iran’s nuclear activities, authority over the strait, and the potential lifting of sanctions. Trump had earlier stated that reopening the waterway and Iran surrendering its highly enriched uranium were his prerequisites for a deal.

Wider economic worries are also suppressing demand. US personal consumption expenditure inflation exceeded forecasts, bolstering expectations that the Federal Reserve will maintain elevated interest rates. Revised GDP figures for the first quarter also indicated more sluggish economic expansion.