Crude prices fell sharply in Asian trading on Monday as investors reacted to signs that a possible U.S.-Iran peace agreement could ease tensions in the Gulf and reopen one of the world’s most important energy routes.
Brent crude dropped 5.5% to $97.90 a barrel, while U.S.-traded crude fell 5.8% to $90.99. The retreat came after U.S. President Donald Trump suggested over the weekend that negotiations involving Tehran and several regional governments had made substantial progress, although he later urged both sides not to rush the final stages.
The possibility of a deal also helped lift Asian stock markets. Japan’s Nikkei 225 rose 2.9% and moved above 65,000 for the first time, as investors hoped that a calmer outlook in the Gulf could reduce pressure on energy costs. Japan and South Korea have been among the economies most exposed to the disruption because of their dependence on oil and gas from the region.
The Strait of Hormuz remains central to the market reaction. The narrow waterway normally carries around a fifth of global oil and liquefied natural gas, but it has been effectively closed since the conflict began on 28 February. Trump has previously said that reopening the route would form part of any agreement, though he has not set out the details.
On Saturday, Trump said he had a “very good call” with the leaders of Saudi Arabia, the United Arab Emirates, Qatar, and others about 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.
“Final aspects and details of the deal are currently being discussed, and will be announced shortly.”
He also said a call with Israeli Prime Minister Benjamin Netanyahu “went very well,” while insisting that any deal would “absolutely” stop Iran from obtaining a nuclear weapon.
By Sunday, Trump struck a more cautious tone. “Both sides must take their time and get it right. There can be no mistakes!”
Iranian foreign ministry spokesman Esmaeil Baqaei said U.S. and Iranian positions had moved closer in recent days, but warned that difficult issues remained unresolved and accused Washington of making “contradictory statements.”
Despite Monday’s fall, oil prices remain far above pre-war levels, when Brent traded near $70 a barrel. Analysts said any agreement could bring near-term relief, but restoring shipping confidence, repairing damaged facilities, and rebuilding depleted stocks may take far longer.