Oil slips to two-week low as US and Iran seen moving closer to deal

LONDON — Oil prices fell more than 4% to two-week lows on Monday as optimism grew that the United States and Iran were moving closer to a peace deal, even though the two sides remain divided over key issues including blockades on the Strait of Hormuz.

Brent crude futures LCOc1 fell $4.44, or 4.3%, to $99.10 a barrel at 0822 GMT, while U.S. West Texas Intermediate CLc1 futures were at $92.24 a barrel, down $4.36, or 4.5%. Both benchmarks touched their lowest levels since May 7 earlier in the session.

On Saturday, U.S. President Donald Trump said Washington and Iran had “largely negotiated” an understanding on a peace deal that would reopen the Strait of Hormuz, a critical waterway that carried about a fifth of global oil and liquefied natural gas shipments before the conflict.

However, both sides remain at odds over several key issues, and Trump said on Sunday he had instructed his representatives not to rush into any agreement.

“We’ve been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting,” said Warren Patterson, head of commodities strategy at ING.

Officials on both sides also tempered expectations of an imminent breakthrough on Monday. U.S. Secretary of State Marco Rubio said there would either be a good agreement or Washington would deal with Iran in “another way.”

Iranian foreign ministry spokesperson Esmaeil Baghaei said Iran was negotiating an end to the war but was not currently discussing nuclear issues.

Analysts said a return to normal oil flows through the Strait could take months, as damaged oil and gas infrastructure would need time to be repaired.

“We continue to believe that the key factors for the oil market to watch should be the physical oil flows and so far, flows through the Strait remain restricted,” UBS analyst Giovanni Staunovo said.

Shipping data showed two liquefied natural gas tankers were exiting the Strait on Monday, heading to Pakistan and China, while a supertanker carrying Iraqi crude left the Gulf for China on Saturday after being stranded for nearly three months.

Separately, U.S. energy firms added oil and natural gas rigs for a fifth consecutive week, the first such streak since February 2025, responding to higher domestic energy prices.

The rig count, an early indicator of future output, rose by seven to 558 in the week to May 22, its highest level since June 2025. Even so, Baker Hughes said the total was still down eight rigs, or 1%, from a year earlier.

-Reporting by Florence Tan and Sudarshan Varadhan in Singapore; Editing by Clarence Fernandez and Gus Trompiz/Reuters