global oil prices slide
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Global oil prices fell sharply on Monday while Asian stock markets advanced after renewed optimism surrounding a possible US Iran peace deal raised expectations that disruptions to global energy supplies could soon ease.
Brent crude, the global crude oil benchmark, dropped 5.5% to $97.90 a barrel during early trading, while US-traded crude declined 5.9% to $90.93. The move followed comments from US Secretary of State Marco Rubio, who said negotiators had a “pretty solid thing on the table” and suggested an agreement to end the conflict between Iran, the United States, and Israel could be reached as early as Monday.
The sharp decline in prices marked one of the biggest recent swings in global oil prices 2026, as traders reacted to signs of progress in negotiations aimed at ending months of instability tied to the US-Israel war with Iran.
US Iran Peace Deal Raises Hopes for Energy Relief
The conflict, which began on 28 February, effectively disrupted shipping activity through the Strait of Hormuz, one of the world’s most strategically important energy routes. Roughly one fifth of global oil and liquefied natural gas shipments typically move through the narrow waterway. US President Donald Trump previously stated that any peace arrangement would include the Strait of Hormuz reopening, though he did not offer detailed timelines or operational specifics. Speaking during a visit to India, Rubio told reporters that negotiations remained active despite delays.
“We’re still a work in progress. As I said, you know, we thought we might have some news last night. Maybe today,” Rubio said in New Delhi. His comments came after Trump signaled caution over the weekend despite earlier optimism. The US president wrote on Truth Social that negotiators should “not rush into a deal,” warning that “both sides must take their time and get it right.”
Earlier, Trump said he held a “very good call” with leaders from Saudi Arabia, the United Arab Emirates, Qatar and other regional allies regarding what he described as a “Memorandum of Understanding pertaining to PEACE.”
“An agreement has been largely negotiated, subject to finalization between the United States of America, the Islamic Republic of Iran, and the various other Countries, as listed,” Trump said.
The administration has continued to insist any final settlement would prevent Iran from obtaining nuclear weapons. Iranian officials also indicated cautious progress. Foreign ministry spokesman Esmaeil Baqaei said Iranian and US positions had been moving closer in recent days but warned that major disagreements remained unresolved.
Oil Markets React to Inflation and Shipping Risks
The decline in oil prices reflects broader shifts across world energy markets, which have experienced severe volatility since March as Iran threatened attacks on ships using the Strait of Hormuz. The disruption triggered intense energy market price swings, pushed shipping insurance costs higher, and affected global LNG shipping routes, particularly for countries dependent on Gulf energy supplies.
Despite Monday’s drop, oil remains significantly more expensive than before the conflict began. Prior to the escalation, Brent crude traded near $70 per barrel. The recent Brent crude price drop followed rising optimism after an Operation Epic Fury ceasefire was reached in early April, allowing Washington and Tehran to begin long-term diplomatic discussions.
Energy analysts said the market response reflected hopes of near-term relief, though risks remain elevated. “There is now some light at the end of the tunnel, which will bring some near-term oil price relief,” Saul Kavonic, head of energy research at MST Financial, said.
However, he cautioned that even a successful peace agreement would not immediately stabilize supply chains, noting that damaged infrastructure, shipping disruptions, and depleted inventories could continue to tighten markets through 2027.
Asian Stocks Rally as Markets Price in Stability
Investor optimism also lifted equity markets across Asia. Japan’s Nikkei 225 rose more than 3%, climbing above the 65,000 mark for the first time as hopes grew that energy flows through the Gulf could normalize. The move contributed to a broader Asian stocks rally, with investors betting lower fuel costs could ease pressure on economies heavily dependent on imported energy.
Japan and South Korea have been particularly exposed to the crisis because of their reliance on Gulf oil and gas imports. Shipping experts also urged caution. Lars Jensen, chief executive of Vespucci Maritime and former Maersk director, said shipping companies would likely remain hesitant even if a peace deal is announced immediately.
He noted that risks, including potential sea mines in and around the Strait, could mean months before shipping patterns return to pre-war levels. The impact of the Strait of Hormuz reopening on global energy markets in 2026 is expected to remain closely watched by governments, traders, and investors as negotiations continue. While optimism over a US Iran peace deal helped ease immediate market fears, uncertainty surrounding implementation and long-term regional stability continues to shape the outlook for oil and financial markets.
This story was originally featured in BBC