Brent Crude Slips Below $100 on Iran Deal Optimism; IEA Chief Birol Warns of July Oil Supply Crisis

Brent crude fell below $100 per barrel for the first time in nearly three weeks on Monday, trading at $98.37 per barrel as of morning May 25 trading on ICE, per OilPrice.com. That is a decline of $5.17, or 4.99%, from Friday's ICE settlement. WTI crude fell to $91.69 per barrel, down $4.91 or 5.08%, in CME Globex electronic trading. US markets are closed for Memorial Day.

The catalyst was a weekend post on Truth Social by US President Donald Trump stating that a 14-point framework with Iran has been largely negotiated. The framework covers a reopening of the Strait of Hormuz, a lifting of the US naval blockade on Iranian ports, and a time-limited window for nuclear negotiations. Trump said the US-Iran relationship is becoming a more professional and productive one. Global equity markets rallied in response, with Japan's Nikkei 225 hitting a record high.

Rubio and Tehran Both Say No Signing Is Imminent

Secretary of State Marco Rubio walked back the optimism in comments published Sunday. He said there is a pretty solid thing on the table regarding Hormuz and nuclear talks, but called the process a work in progress. He warned the United States would handle Iran in another way if negotiations collapsed. Iran's Foreign Ministry spokesperson Esmaeil Baghaei said separately that progress does not mean that the signing of an agreement is imminent. Trump confirmed that the US naval blockade on Iranian ports remains in effect until an agreement is reached, certified, and signed.

This publication reported on May 23 that the ceasefire deal appeared near signing, with Brent falling 5% on that news. Monday's additional 5% decline erases the $100-per-barrel level for the first time since the Hormuz conflict began in earnest. Approximately 100 tankers remain stranded in the Persian Gulf. Only about 19 crude and LPG tankers carrying non-Iranian cargoes have cleared the strait since March 1, against a pre-war norm of 140 ships per day.

UAE Murban Crude Falls Harder Than Brent: The Bypass Calculation

Murban crude, ADNOC's Abu Dhabi-based benchmark, fell 8.11% to $93.92 per barrel on Monday, a sharper decline than Brent's 4.99%. The differential reflects UAE's specific Hormuz exposure compared with Saudi Arabia. ADNOC's Habshan-Fujairah pipeline bypasses the strait and handles approximately 1.5 million barrels per day against UAE production capacity of roughly 4 million barrels per day. That leaves approximately 62% of UAE crude output dependent on Hormuz transit.

Saudi Arabia can route up to 7 million barrels per day via the East-West Petroline to Yanbu on the Red Sea. Oil Authority reported in May that Aramco's East-West pipeline was running at full capacity, pinning Saudi national output near 8 million barrels per day. In pre-conflict trading, Murban fetched a $1 to $4 premium above Brent due to its light, sweet quality. Monday's Murban-Brent spread of negative $4.45 per barrel represents roughly a $5 to $8 per barrel swing in UAE-specific Hormuz risk premium from pre-war norms.

IEA's Birol: July and August Carry Red-Zone Risk

IEA Executive Director Fatih Birol said global oil and fuel inventories fell at a rate of 8.62 million barrels per day in April, accelerating from 5.27 million barrels per day in March. He described the current disruption as more severe than the 1973 and 1979 oil shocks. Birol stated: this may be difficult and we may be entering the red zone in July-August if we don't see some improvements. The IEA's red zone indicates critically low global inventories coinciding with peak summer demand and continued supply disruption.

Fereidun Fesharaki, Chairman Emeritus of energy consultancy FGE NexantECA, issued a parallel warning. He said negotiations have not materially advanced despite positive headlines. Fesharaki said that sooner or later the market reaches the trigger point where prices go for a huge jump, and identified July as the threshold month. His argument centers on the physical crude deficit building behind Hormuz, which sentiment-driven trading cannot offset indefinitely. The global inventory buffer is contracting at its fastest recorded pace.

What a Signed Deal Would and Would Not Immediately Fix

A signed agreement under the current framework would reopen Hormuz and lift sanctions on Iranian oil exports. Iran has offered not to impose transit tolls through the strait but expects compensation for maritime security services. The estimated 100 tankers currently stranded in the Persian Gulf could begin transiting within days of a formal agreement. Iranian news agency Tasnim reported Hormuz traffic could return to pre-war levels within 30 days of a signed deal.

No mine-clearing operations have begun as of Monday morning. The strait remains a contested waterway in the absence of a certified accord. If the deal collapses and Hormuz stays closed into July and August, IEA projections suggest global inventory levels reach critically low territory as summer demand peaks. EIA weekly inventory data, due Wednesday, May 27, will provide the next hard data point on US crude stock levels. Both Brent's current trading level and Fesharaki's July warning rest on one unsettled variable: whether the 14-point framework becomes a signed document this week.