oil drops – Global oil prices have dropped about 20% from their 2026 highs as investors bet on a longer U.S.-Iran ceasefire and the reopening of shipping through the Strait of Hormuz. But strikes have continued, and analysts say vessel traffic and energy flows remain slug
Oil prices moved like a market trying to exhale—falling sharply from the highs investors had been tracking since 2026—after confidence grew that U.S.-Iran ceasefire talks could lead to something more durable.
Brent crude dropped 1.2% on the final trading day of the month, to $92.56, at 11:18 a.m. in London (6:35 a.m. ET.). For the month, the international benchmark has plunged almost 19% in May, its worst month since the Covid-19 pandemic, and is now about 20% lower than its 2026 peaks.
U.S. West Texas Intermediate futures showed the same downward pressure. Prices fell 16.5% month-to-date, and were last seen almost 1.9% lower on Friday at $87.18.
The optimism is tied to one concrete, market-moving possibility: shipping through the Strait of Hormuz. Energy prices have soared since the war began on Feb. 28, and seaborne crude has largely been unable to pass through the strait. The Strait of Hormuz—between Iran and Oman—has been described as a critical shipping lane accounting for about 20% of global energy supply before the conflict.
Now, the tone around negotiations has shifted. The U.S. and Iran are understood to have “mostly agreed” on the terms of a 60-day memorandum of understanding to extend the ceasefire. But the agreement still depends on sign-off from President Donald Trump.
Even with that prospect on the horizon, Thursday brought no pause in violence. Iranian forces fired ballistic missiles at Kuwait and sent attack drones toward the Strait.
UBS pointed to the mismatch between hopes on paper and conditions on the water. In a note, UBS said there is still “little evidence” of any short-term improvement in vessel traffic or energy flows through the region.
The bank’s data sharpened the picture. UBS analysts led by Henri Patricot. executive Director. equity research. oil and gas sector. said crude loadings inside the Gulf remain “extremely low.” They added that Iran crude loadings for May remain below 0.3 million barrels per day. down from April’s average of 1.5 million barrels a day and March’s 1.7 million barrels a day.
That gap—between the ceasefire extension that is nearly agreed and the reality of strikes and shipping disruptions—is exactly what keeps traders cautious.
The sequencing is stark in the numbers and the timing: prices fall on the prospect of Hormuz reopening, yet attacks continue, and UBS says vessel traffic and energy flows haven’t caught up. Even the month-to-date declines sit alongside crude loadings that are still far below earlier levels.
Bob Parker. senior advisor at the International Capital Markets Association. said oil prices will likely remain between $90 and $100 “at least for the next couple of months” until there is clearer confirmation of any lasting peace agreement. He also warned of “inevitable” investor skepticism toward the negotiations.
“If the Strait of Hormuz is opened. I think it’s fair to say that opening will only be partial. ” Parker told CNBC’s “Squawk Box Europe” on Friday. He pointed to “significant” damage to infrastructure. refineries and pipelines across the Gulf from the war. plus ongoing security challenges for tanker traffic and depleted inventories.
oil prices Brent crude West Texas Intermediate U.S.-Iran ceasefire Strait of Hormuz Donald Trump Kuwait ballistic missiles attack drones Henri Patricot International Capital Markets Association Bob Parker