Oil prices fell sharply on Monday amid expectations of a possible peace deal to end the US-Israel war with Iran, while Asian stock markets surged on hopes that easing Middle East tensions could soon improve global stability. US President Donald Trump said over the weekend that a deal with Tehran was “largely negotiated”. He added that more details would be shared later.
However, he cautioned his team against hasty actions, emphasising the need for careful handling of the final agreement. Global crude prices fell quickly in early Asian trading. Brent oil declined by about 5.5% to around $97.90 per barrel. US crude also fell by about 5.8% to $90.99. Traders reacted to news that progress was being made in talks and that supply risks could reduce if peace efforts succeed.
A key part of the discussions involves the Strait of Hormuz. This is a very important shipping route for oil and gas. Around one-fifth of global energy supply normally passes through it. The route has been disrupted since conflict began earlier this year, raising concerns about global supply shortages. There are expectations that the strait could reopen if a deal is finalised. This has helped improve investor confidence. Stock markets in Asia responded positively.
Japan’s Nikkei index rose more than 2% and passed the 65,000 level for the first time. Energy-dependent countries like Japan and South Korea are especially sensitive to changes in oil supply and prices. Trump also said he spoke with leaders from Saudi Arabia, the United Arab Emirates, Qatar, and other countries. He described the discussions as positive and mentioned a possible “memorandum of understanding” related to peace.
He also said he had a positive conversation with Israeli Prime Minister Benjamin Netanyahu. Despite optimism, uncertainty remains. Iran’s foreign ministry said that while talks with the US had moved closer, major disagreements still exist. Officials also accused the US of sending mixed messages. This shows that a final agreement is not guaranteed yet. Energy markets have been unstable since the conflict began.
Prices rose earlier after Iran threatened to block the Strait of Hormuz and attacked regional targets. A temporary ceasefire was reached in April, followed by ongoing negotiations for a longer peace plan. Even with recent price drops, oil remains pricier than before the conflict started. Analysts warn that even if peace is reached, global oil markets may stay tight for years due to slow recovery of supply routes and damaged infrastructure.
