CrudeThursday, 28 May 2026·India
Oil prices tumble on US-Iran deal hopes, recover after fresh US strikes as Hormuz disruptions continue
Global oil markets remained highly volatile this week as changing expectations surrounding US-Iran negotiations continued to influence trading sentiment. Crude prices dropped sharply after optimism over a possible diplomatic breakthrough raised hopes for easing supply disruptions and reopening the Strait of Hormuz. However, fresh US military strikes on Iranian targets later triggered a partial rebound in prices, highlighting the ongoing geopolitical uncertainty in the region.
Oil benchmarks came under strong pressure on May 27, with both Brent and WTI crude falling by more than $5 per barrel and touching their lowest levels in over a month. Traders increasingly bet that Washington and Tehran could move closer to an agreement that may reduce tensions and improve oil flows through the Strait of Hormuz.
Brent crude declined by $5.29 per barrel, or 5.31%, to settle at $94.29 per barrel, fully erasing gains from the previous trading session. WTI crude also dropped sharply, losing $5.21 per barrel, or 5.55%, to close at $88.68 per barrel.
The sell-off was driven mainly by signs of progress in diplomatic discussions between the United States and Iran. Comments from Iranian military officials suggesting lower chances of renewed conflict further improved market confidence that tensions could gradually ease. Traders also responded to reports of limited tanker movement resuming through the Strait of Hormuz, increasing hopes that some disrupted crude supply may eventually return to the market.
Despite the sharp decline, oil prices rebounded during early Thursday trading after reports emerged that the United States carried out new overnight strikes on an Iranian military site believed to threaten US forces and commercial shipping operations near the Strait of Hormuz.
Following the renewed military action, Brent crude gained $1.84 per barrel, or 1.95%, rising above $96.13 per barrel. WTI crude also recovered by $1.65 per barrel, or 1.86%, climbing back above the $90 per barrel mark.
Market analysts said the latest military developments demonstrated how fragile the ongoing negotiations remain and reminded traders that geopolitical risks are still elevated despite diplomatic progress. Several major issues between Washington and Tehran remain unresolved, limiting confidence in the possibility of a fast agreement.
Additional support for oil prices came from tightening US crude inventories. Latest reports showed US crude stockpiles fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline and indicating relatively firm underlying demand.
Meanwhile, shipping activity through the Strait of Hormuz continues to face severe disruption despite ongoing negotiations. Logistics companies reported that only a limited number of commercial vessels are currently able to transit the route, often under military escort and with tracking systems switched off.
US naval forces are reportedly accompanying selected tankers through the Strait, while Iranian patrol boats continue closely monitoring the area. Industry observers warned that even if geopolitical tensions ease, restoring normal shipping activity could take months due to security concerns, insurance complications, and damaged market confidence.
Concerns over long-term disruption increased further after ADNOC CEO Sultan Al Jaber stated that full normalization of oil flows through the Strait of Hormuz may not happen before the second quarter of 2027. As a result, a significant portion of Middle Eastern crude supply remains exposed to geopolitical risks, preventing the market from fully dismissing supply concerns despite recent price weakness.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.
Oil benchmarks came under strong pressure on May 27, with both Brent and WTI crude falling by more than $5 per barrel and touching their lowest levels in over a month. Traders increasingly bet that Washington and Tehran could move closer to an agreement that may reduce tensions and improve oil flows through the Strait of Hormuz.
Brent crude declined by $5.29 per barrel, or 5.31%, to settle at $94.29 per barrel, fully erasing gains from the previous trading session. WTI crude also dropped sharply, losing $5.21 per barrel, or 5.55%, to close at $88.68 per barrel.
The sell-off was driven mainly by signs of progress in diplomatic discussions between the United States and Iran. Comments from Iranian military officials suggesting lower chances of renewed conflict further improved market confidence that tensions could gradually ease. Traders also responded to reports of limited tanker movement resuming through the Strait of Hormuz, increasing hopes that some disrupted crude supply may eventually return to the market.
Despite the sharp decline, oil prices rebounded during early Thursday trading after reports emerged that the United States carried out new overnight strikes on an Iranian military site believed to threaten US forces and commercial shipping operations near the Strait of Hormuz.
Following the renewed military action, Brent crude gained $1.84 per barrel, or 1.95%, rising above $96.13 per barrel. WTI crude also recovered by $1.65 per barrel, or 1.86%, climbing back above the $90 per barrel mark.
Market analysts said the latest military developments demonstrated how fragile the ongoing negotiations remain and reminded traders that geopolitical risks are still elevated despite diplomatic progress. Several major issues between Washington and Tehran remain unresolved, limiting confidence in the possibility of a fast agreement.
Additional support for oil prices came from tightening US crude inventories. Latest reports showed US crude stockpiles fell by 2.8 million barrels last week, marking the sixth consecutive weekly decline and indicating relatively firm underlying demand.
Meanwhile, shipping activity through the Strait of Hormuz continues to face severe disruption despite ongoing negotiations. Logistics companies reported that only a limited number of commercial vessels are currently able to transit the route, often under military escort and with tracking systems switched off.
US naval forces are reportedly accompanying selected tankers through the Strait, while Iranian patrol boats continue closely monitoring the area. Industry observers warned that even if geopolitical tensions ease, restoring normal shipping activity could take months due to security concerns, insurance complications, and damaged market confidence.
Concerns over long-term disruption increased further after ADNOC CEO Sultan Al Jaber stated that full normalization of oil flows through the Strait of Hormuz may not happen before the second quarter of 2027. As a result, a significant portion of Middle Eastern crude supply remains exposed to geopolitical risks, preventing the market from fully dismissing supply concerns despite recent price weakness.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.