Crude Oil Prices Slides As US-Iran Talks Progress
Global crude oil prices declined sharply on May 20th after Donald Trump indicated that negotiations between the United States and Iran had entered the final stages, raising expectations of easing geopolitical tensions in the Middle East.
US benchmark West Texas Intermediate (WTI) crude futures dropped more than 5% to settle at US$ 98.26 per barrel, while Brent crude futures fell over 5% to close at US$ 105.02 per barrel.
Trump said the US administration had paused renewed military action against Iran to allow more time for diplomatic discussions, following requests from Gulf Arab allies. He also stated that talks with Tehran were progressing toward a possible agreement.
The oil market has remained highly volatile in recent weeks amid tensions surrounding the Strait of Hormuz, a critical global shipping route for oil and gas supplies. Iran and the US have remained in a prolonged standoff, with disruptions to regional trade flows continuing to fuel supply concerns.
Despite the latest decline in prices, market analysts warned that risks to global oil supply remain elevated.
Citibank said the market may be underestimating the possibility of prolonged disruption in the Strait of Hormuz and projected Brent crude could rise to US$ 120 per barrel in the near term if tensions escalate further.
Meanwhile, consulting firm Wood Mackenzie warned that oil prices could approach US$ 200 per barrel in a worst-case scenario where the Strait of Hormuz remains closed for an extended period.
However, the firm added that a successful peace agreement between the US and Iran could significantly ease prices, with Brent crude potentially falling to around $80 per barrel by the end of 2026 if trade flows normalise quickly.
