Business
Oil Prices Drop as Traders Eye Potential Strait of Hormuz Stability
Global oil prices recorded sharp declines in May, with Brent crude posting its steepest monthly loss since 2020 as markets reacted to signs of progress in U.S.-Iran negotiations and hopes of uninterrupted shipping through the Strait of Hormuz.
Global crude oil markets witnessed a significant downturn in May, with Brent crude recording its largest monthly decline in six years amid growing optimism over a potential agreement between the United States and Iran.
The international benchmark fell by more than 19 per cent during May, marking its worst monthly performance since March 2020, when the COVID-19 pandemic severely impacted global economic activity and energy demand.
Meanwhile, West Texas Intermediate (WTI) crude declined nearly 17 per cent during the month, its weakest performance since April 2025.
Monthly Performance
| Benchmark | Monthly Change |
|---|---|
| Brent Crude | -19%+ |
| WTI Crude | -17% |
Market sentiment improved following indications that Washington and Tehran were moving closer to an agreement that could reduce tensions in the Gulf region and ensure the continued flow of energy supplies through the strategically important Strait of Hormuz.
Friday’s Closing Prices
Oil prices extended their losses on Friday after U.S. President Donald Trump said he would convene a meeting in the White House Situation Room to make a final determination regarding a possible agreement with Iran.
| Oil Benchmark | Closing Price |
|---|---|
| WTI Crude | $87.36 per barrel |
| Brent Crude | $92.05 per barrel |
WTI crude fell 1.73 per cent during the session, while Brent crude declined 1.77 per cent.
Why Markets Reacted
Investors believe that a diplomatic breakthrough between the U.S. and Iran could:
- Reduce geopolitical risks in West Asia.
- Ensure uninterrupted movement of oil tankers through the Strait of Hormuz.
- Ease concerns about supply disruptions.
- Improve stability in global energy markets.
The Strait of Hormuz remains one of the world’s most critical maritime chokepoints, through which a substantial share of global crude oil exports passes each day.
Analysts will continue to monitor developments in U.S.-Iran negotiations, as any final agreement could have a significant impact on oil prices, energy markets, and inflation trends worldwide.
