US-Iran Agreement Expected to Thaw, International Oil Price Plunges Over 5%, Market Prices in Early Restart of the Strait of Hormuz

May 25 — International oil prices opened sharply lower on Thursday, May 25, as markets reacted to signals that a U.S.-Iran agreement is nearing completion. As of press time, both West Texas Intermediate (WTI) and Brent crude futures had fallen more than 5%. Earlier, former President Trump noted U.S.-Iran negotiations were "getting closer" to a deal, though he later clarified the agreement was not yet fully finalized. Even so, the market has already priced in expectations of easing geopolitical risks, weighing on crude values. Analysts attribute the core price drop to growing confidence that the Strait of Hormuz will return to normal operations. Iran reported 33 vessels, including oil tankers, successfully transited the strategic waterway over the past 24 hours — a marked improvement in shipping conditions compared to recent months. Yan Wu, an analyst at Longzhong Information, said a preliminary U.S.-Iran peace deal has sent a long-awaited positive signal to global oil markets. Han Zhengji, an analyst at Jinlianchuang, added that if the deal is formally reached, fading geopolitical risk premiums could leave international oil prices with further room to decline. Should tensions between the two nations spike again, however, oil prices would likely rebound rapidly. Still, several analysts caution the global oil market remains undersupplied. Many Gulf states have not yet returned to pre-tension production levels, and the northern hemisphere is approaching its summer fuel consumption peak. As a result, oil prices may stay volatile at elevated levels in the near term. Wu forecasts Brent crude will trade in a range of $87 to $110 per barrel between June and August.