Global oil prices have dropped approximately 20% from their 2026 highs, driven by investor optimism regarding a potential ceasefire agreement between the U.S. and Iran. As of the last trading day of May, Brent crude fell to $92.56, marking its worst month since the onset of the COVID-19 pandemic, while U.S. West Texas Intermediate futures dropped to $87.18. The conflict has severely restricted crude shipments through the vital Strait of Hormuz, which previously accounted for about 20% of global energy supply.
Despite the positive sentiment around peace talks, UBS analysts caution that actual improvements in oil flows remain elusive. Iranian crude loadings have plummeted to below 0.3 million barrels per day in May, down from 1.5 million in April, indicating ongoing supply constraints. The potential for a ceasefire, while encouraging, faces skepticism due to continued military actions and significant damage to regional infrastructure.
Market professionals should remain vigilant, as oil prices are expected to stabilize between $90 and $100 in the near term, pending clearer insights into the ceasefire’s durability and the reopening of shipping routes.
Source: cnbc.com