Oil Prices Fall on Unverified US-Iran Deal Hopes

Oil prices dropped sharply Monday as investors responded to signs of progress in talks between the United States and Iran aimed at ending three months of fighting and reopening the Strait of Hormuz. Brent crude fell more than 5 percent to near 98 dollars a barrel, while West Texas Intermediate traded below 91 dollars, marking the lowest levels in two weeks.

The decline followed comments from President Donald Trump that an agreement had been largely negotiated to restore access to the waterway, through which roughly one-fifth of global oil and liquefied natural gas shipments normally pass. Trump said he had instructed negotiators not to rush any final terms. Secretary of State Marco Rubio added that the process remained a work in progress during remarks in New Delhi. Iranian officials confirmed that substantial portions of the discussions had advanced but stressed that a signed deal was not imminent.

Asian equity markets rose on the news. Japan's Nikkei 225 climbed more than 3 percent in early trading, while Australia's benchmark index gained modestly. Trading remained thin in several major centers closed for holidays. The dollar eased to its weakest level in a week, and gold prices advanced more than 1 percent as lower energy costs reduced near-term inflation concerns.

The conflict, which began in late February, had driven energy prices higher and complicated the outlook for interest rates. With the strait effectively closed, importers such as Japan faced disrupted supplies and elevated costs. Analysts noted that markets were shifting from pricing in geopolitical risk toward assessing potential relief if traffic resumes without new restrictions or tolls.

Former CIA director David Petraeus observed that Iran appeared to be yielding ground on control of the strait. He said any viable arrangement would need to prevent Tehran from regulating passage or threatening future closures. Petraeus also pointed out that Iranian naval and missile capabilities had been significantly reduced by prior strikes, though he warned that partial concessions could still leave the regime in a stronger strategic position over time.

Iran has insisted on retaining its stockpile of highly enriched uranium, a point that remains unresolved. Trump has indicated that Washington would either secure acceptable terms or pursue an alternative course. Markets showed limited reaction to these caveats, focusing instead on the consistent tone of recent statements suggesting movement toward de-escalation.

The episode illustrates how commodity prices and asset values adjust quickly to changes in expected supply conditions. Reduced fears of sustained shortages have already lowered crude benchmarks and supported equities, even as negotiators continue to address core disputes. Further price movements will depend on whether the strait reopens on terms that restore reliable flows without creating new leverage for either side.