Oil prices are heading for their biggest monthly fall since March 2020, fueled by growing hopes for a ceasefire between the U. S. and Iran. Brent crude futures, the global benchmark, fell nearly 20% in May, settling at $92.05 a barrel. West Texas Intermediate crude also slid, dropping almost 17% to close at $87.36 a barrel.
The potential for a ceasefire has eased concerns about supply disruptions in the Persian Gulf, a critical region for global oil production. Reports suggest that negotiators from the U. S. and Iran have reached a tentative agreement to extend the existing ceasefire by 60 days, although final approval is still pending from both President Trump and Iranian leaders. "The 60-day cease-fire may be a more noteworthy step towards a lasting end to the war," said Tyler Richey, technical analyst at Sevens Report.
The easing of geopolitical tensions has also had a positive effect on stock markets. With oil prices coming down, investors have started to price out the more stagflationary outcomes for the global economy, with a clear rally across multiple asset classes," said Henry Allen, of Deutsche Bank.
However, some analysts caution that the oil market could still face supply constraints due to time lags in tanker transportation and resuming production. Despite the recent price declines, both Brent and WTI remain above pre-war levels.
