Oil prices fell about 5% for a second day in a row to a three-month low on Tuesday as details emerged of an interim deal to end the war in the Middle East and reopen the Strait of
The report indicates that oil prices fell about 5% for a second day in a row to a three-month low on Tuesday as details emerged of an interim deal to end the war in the Middle East and reopen the Strait of Hormuz, including an agreement allowing Iran to sell oil.
It further notes that brent crude futures fell $4.21, or 5.1%, to settle at $78.96 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $4.70, or 5.8%, to settle at $76.05.
Those were the lowest closes for Brent since March 2 and for WTI since March 4.
The U.S.-Iran war started on February 28. On February 27, Brent closed at $72.48 a barrel, and WTI closed at $67.02.
“Crude oil is sliding fast on the assumption the Strait of Hormuz will open soon,” Bob Yawger, director of energy futures at Mizuho, stated in a note. Before the war, about 20% of global oil supplies passed through the strait.
Details of the interim deal to end the war began to emerge on Tuesday, with U.S. President Donald Trump saying it will rule out a nuclear weapon for Tehran and a U.S. official saying it allows Iran to sell oil upon signing.
The deal would extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, which Iran has effectively blocked since the U.S. and Israel first attacked Iran.
Still, doubts swirled around the deal, with experts warning that shipping and energy exports could take weeks to recover. In Lebanon, the Iran-backed Hezbollah group stated it believes Iran will not sign a final nuclear deal unless Israel withdraws from Lebanon.
“For now, a major vote of confidence is being applied to the success of this plan with limited regard to thorny issues such as financial compensation, sanctions and especially a satisfactory nuclear deal that was largely the reason behind the war,” analysts at energy advisory firm Ritterbusch and Associates stated in a note.
News of the preliminary agreement prompted investment banks, including Goldman Sachs, Morgan Stanley and Citi, to lower their oil price forecasts.
Other factors weighing on oil prices included worries about China’s economy, rising global inflation and interest rates, and U.S. calls for peace between Russia and Ukraine.
China, the world’s second-biggest economy, showed increasing unevenness in May, while the country’s crude oil throughput fell 9.1% from a year earlier to its lowest level in almost four years.
Trump stated Russia should make peace with Ukraine after a “very good” meeting with Ukrainian President Volodymyr Zelenskiy on Tuesday, sparking cautious optimism among Group of Seven (G7) leaders that a peace deal could be struck.
A settlement in the Ukraine war could lead to the lifting of some sanctions on Russia, allowing Moscow to export more oil. Russia was the world’s third-largest crude oil producer , behind the U.S. and Saudi Arabia, in 2025, according to U.S. energy data.
