Oil Prices Drop as Hopes Rise for End to US-Israel-Iran Conflict

Oil prices dropped sharply on Monday while Asian stock markets surged amid growing hopes of a deal that could end the conflict involving the US, Israel, and Iran.

US Secretary of State Marco Rubio said negotiators had a “pretty solid thing on the table” and suggested an agreement could be reached on Monday.

Global oil benchmark Brent crude fell by 5.5% to $97.90 per barrel, while US-traded crude dropped 5.9% to $90.93.

US President Donald Trump earlier stated that the proposed deal would include reopening the crucial Strait of Hormuz shipping route, though he did not provide further details.

Iran said progress had been made in the talks, but government spokesman Esmail Baqai cautioned that a final agreement was “not imminent.”

The Strait of Hormuz, which handles about a fifth of the world’s oil and liquefied natural gas exports, has remained largely closed since the conflict began on 28 February.

Rubio, speaking in Delhi, India, said negotiations were still ongoing and that officials had hoped for positive developments sooner.

Trump also noted that he had instructed negotiators “not to rush into a deal,” despite previously hinting that an agreement was close.

Iran’s foreign ministry spokesman later confirmed that consensus had been reached on a large portion of the issues being discussed, though no final deal had yet been signed.

On Saturday, Trump revealed he had held discussions with leaders from Saudi Arabia, the United Arab Emirates, Qatar, and other nations regarding a “Memorandum of Understanding pertaining to PEACE.”

He said most parts of the agreement had already been negotiated, with only final details still under discussion.

Trump also confirmed he spoke with Israeli Prime Minister Benjamin Netanyahu, describing the conversation as productive.

Energy markets have experienced major fluctuations since early March after Iran threatened ships attempting to pass through the Strait of Hormuz in response to US and Israeli strikes.

Although oil prices have now fallen sharply, they remain above pre-war levels, when Brent crude traded at around $70 per barrel.

A ceasefire reached in early April paved the way for ongoing talks between Washington and Tehran aimed at securing a long-term peace agreement.

Saul Kavonic, head of energy research at MST Financial, said there was now “some light at the end of the tunnel” that could ease oil prices in the short term.

However, he warned that oil markets could remain tight through 2027 due to the time needed to restore oil flows, repair damaged infrastructure, and rebuild global reserves depleted during the war.

Lars Jensen, chief executive of Vespucci Maritime and former Maersk director, said shipping companies would remain cautious even if a deal is announced soon.

He explained that vessels stranded in the Persian Gulf may attempt to leave, but many operators would hesitate to fully resume operations until stability is guaranteed.

Jensen also noted that potential sea mines and other security risks could delay a full recovery of supply chains for several months.

Meanwhile, Japan’s Nikkei 225 stock index climbed more than 3%, surpassing 65,000 points for the first time as investors reacted positively to hopes that the Strait of Hormuz could soon reopen.

Japan and South Korea have been heavily affected by the crisis due to their strong dependence on Gulf energy supplies.

UK and US energy and financial markets remained closed on Monday because of public holidays.