Brent crude declined 7.8% to settle at $101.27 per barrel, while U.S. West Texas Intermediate (WTI) fell 7.0% to $95.08. Both benchmarks touched two-week lows during the session, with Brent briefly dropping below $100 for the first time since late April. The selloff was driven by reports that the United States and Iran are nearing a preliminary agreement, with negotiations focused on a memorandum of understanding. Market participants interpreted the progress as a potential pathway toward reopening the Strait of Hormuz and restoring disrupted supply flows.
While details remain unresolved, the prospect of even a partial agreement has begun to ease supply concerns. However, officials from both sides signaled that key differences remain, and timelines for a finalized deal are still uncertain.
Despite improving sentiment, underlying supply conditions remain tight. The closure of the Strait of Hormuz since late February has significantly reduced global oil flows, contributing to sustained inventory drawdowns and elevated prices in recent weeks.
Even in the event of an agreement, normalization is expected to be gradual. Shipping constraints, insurance risks, and logistical delays suggest that a full recovery in flows could take several weeks after any reopening of the strait.
Additional support for prices came from U.S. inventory data, which showed continued draws in crude and fuel stockpiles, reinforcing the theme of constrained supply despite shifting geopolitical expectations.