SINGAPORE – Oil prices fell to two-week lows on Monday, May 25, as optimism grew that the United States and Iran were moving closer to a peace deal, even as both sides remained divided on key issues, including restrictions in the Strait of Hormuz that continue to disrupt Middle East oil supplies.

Brent crude futures dropped 4.55% to $98.83 a barrel, while US West Texas Intermediate crude fell 4.73% to $92.03 a barrel. Both benchmarks earlier touched their lowest levels since May 7.

US President Donald Trump said on Saturday, May 23, that Washington and Tehran had “largely negotiated” a memorandum of understanding on a peace agreement that would reopen the Strait of Hormuz, a critical shipping route that before the conflict handled about one-fifth of global oil and liquefied natural gas shipments.

But major disagreements remain. Trump said on Sunday, May 24, he had instructed US negotiators not to rush into any agreement with Iran.

MST Marquee analyst Saul Kavonic said signs of progress in negotiations were easing pressure on oil markets despite lingering risks.

“There is now some light at the end of the tunnel, which will bring some near-term oil price relief,” Kavonic said.

Analysts, however, warned it could still take months for oil flows through the Strait of Hormuz to normalize and for damaged oil and gas infrastructure in the region to be repaired. – Rappler.com