Trump Iran Hormuz Ceasefire Deal Near Signing

Brent crude futures closed at $103.54 per barrel and US West Texas Intermediate settled at $96.60 on Friday May 22 as the United States and Iran moved closer to a 60-day memorandum of understanding that would reopen the Strait of Hormuz, lift the American blockade of Iranian ports, and allow Tehran to sell oil into world markets under temporary sanctions waivers. Brent ended the week down roughly 5 percent and WTI fell more than 8 percent, the steepest weekly decline since the war between the US, Israel, and Iran began on February 28.

What the Deal Reportedly Contains

The framework, described as a memorandum of understanding extendable by mutual consent, hinges on a principle one senior US official summarized as "relief for performance." Iran would clear naval mines deployed in the Strait of Hormuz at the end of February, refrain from collecting tolls on tanker passage during the 60-day window, and commit to negotiate suspension of uranium enrichment and removal of its existing stockpile. The United States would lift its blockade of Iranian ports, issue sanctions waivers permitting Iranian crude exports, and negotiate broader sanctions relief that would only take effect upon a final agreement. US forces would remain forward-deployed in the Persian Gulf during the 60 days and would only withdraw once a permanent settlement is reached.

Hormuz Has Been Effectively Shut for 86 Days

From the start of hostilities on February 28 through Sunday May 24, the Strait of Hormuz has been effectively closed to commercial tanker traffic for 86 days, the longest sustained disruption in the waterway's history as a global oil chokepoint. The International Energy Agency's May Oil Market Report calculated cumulative supply losses from Gulf producers above one billion barrels, with more than 14 million barrels per day of crude shut in at the peak of the disruption. Chevron chief executive Mike Wirth said this month that roughly 20 percent of global crude that normally passes through the waterway remained blocked.

Sticking Points That Could Sink the Deal

Trump and the mediating governments signaled that a Sunday announcement was possible but cautioned that the framework could still collapse. The principal disagreements involve Iran's existing stockpile of enriched uranium, which Tehran has been reluctant to ship out of the country, and the question of whether Iran can extract a transit toll on tankers passing through the Strait after the 60 days expire. The United States has insisted on no tolls during the temporary period; Iran has signaled it considers tolls a sovereign right under any longer-term arrangement.

Price Action and Forecasts

Brent's roughly 5 percent weekly decline implies the front-month contract entered the week near $109 per barrel and shed close to $5.50 by Friday's settle as deal headlines accumulated, an unusually rapid retracement after several weeks of $100-plus trading. Goldman Sachs analysts said in mid-March that global oil stocks could fall to roughly 98 days of forward demand by the end of May, though they did not expect inventories to hit minimum operational levels during the summer. The IEA's May report cut its 2026 oil demand forecast by 420,000 barrels per day to 104 million barrels per day, with the steepest contraction of 2.45 million barrels per day concentrated in the second quarter as high pump prices crimp consumption.

Ripple Effects: UAE, OPEC, Indian Refiners

The United Arab Emirates formally exited OPEC and OPEC+ in late April, citing national interest priorities during the war and dealing the cartel its largest defection since Qatar's 2019 departure. OPEC+ subsequently announced a symbolic 188,000 barrels per day production increase for June, a token gesture given the scale of Gulf disruption. Indian state refiner Petronet has already shifted LNG procurement away from Hormuz routes; if the deal holds, Indian and Chinese refiners would be among the first beneficiaries of restored Iranian crude flows. Saudi Aramco's East-West pipeline workaround, profiled in earlier Oil Authority coverage, has been running at near-maximum 5 million barrels per day to reroute crude to Red Sea terminals.