Global oil prices dropped sharply on Monday as optimism grew over a possible peace agreement between the United States, Israel and Iran.
US President Donald Trump said on Saturday that a deal with Iran had been “largely negotiated” and could be announced soon. However, he later cautioned negotiators against rushing the process.
Following the comments, Brent crude oil prices fell by 5.5% to $97.90 per barrel, while US crude dropped by 5.8% to $90.99 in Asian trading.
Asian stock markets reacted positively to the developments. Japan’s Nikkei 225 index rose by 2.9%, crossing the 65,000 mark for the first time, as investors hoped the Strait of Hormuz shipping route could soon reopen.
The Strait of Hormuz is a key global shipping route through which about one-fifth of the world’s oil and liquefied natural gas passes. The route has remained largely closed since the conflict between Iran, Israel and the US began on February 28.
Trump said he had held talks with leaders from Saudi Arabia, the United Arab Emirates and Qatar about a peace agreement involving the United States, Iran and other countries.
“An agreement has been largely negotiated, subject to finalisation,” Trump wrote on social media.
He also revealed that he had spoken with Israeli Prime Minister Benjamin Netanyahu, describing the conversation as positive.
Although details of the proposed agreement have not been made public, Trump insisted the deal would prevent Iran from obtaining nuclear weapons.
Iranian foreign ministry spokesman Esmaeil Baqaei acknowledged that discussions with the US had made progress in recent days but warned that major disagreements still remained.
Oil prices have experienced major fluctuations since the conflict escalated in March after Iran threatened to target ships using the Strait of Hormuz in response to attacks by the US and Israel.
Despite the latest decline, oil prices remain significantly higher than before the conflict, when Brent crude traded at around $70 per barrel.
Energy analyst Saul Kavonic said the market was encouraged by signs of peace but warned that oil supply challenges could continue for years.
“There is now some light at the end of the tunnel,” he said, adding that rebuilding damaged facilities and restoring normal oil flows would take time.
