Oil prices fall on hopes of US-Iran peace deal, but key issues remain unresolved

Oil prices have dropped to a two-week low, driven by optimism surrounding potential peace talks between the United States and Iran. The prospect of an agreement that could reopen the vital Strait of Hormuz, a critical chokepoint for Middle Eastern oil supplies, has eased market concerns.

Brent crude futures saw a significant decline, falling by 4.55% to $98.83 per barrel, while West Texas Intermediate (WTI) oil futures decreased by 4.73% to $92.03 per barrel. Both benchmarks reached their lowest points since May 7.

This development follows statements from U.S. President Donald Trump indicating that the two nations had largely negotiated a memorandum of understanding for a peace deal. The Strait of Hormuz, prior to the conflict, accounted for one-fifth of the world's oil and liquefied natural gas transport.

However, substantial disagreements persist between the US and Iran on key negotiation points, including the passage through the Strait of Hormuz. Trump has reportedly advised his representatives against rushing into an agreement. Analysts suggest that even with a deal, it could take months for oil transport through the strait to return to normal levels and for damaged facilities to be repaired.

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On the table is now a light at the end of the tunnel, which will be a certain short-term relief for oil prices, despite all the reservations and risks that still surround the peace deal and the Strait of Hormuz.