WTI Crude Falls 6 Percent to $90 Per Barrel as US-Iran Deal Targets Hormuz Reopening

WTI crude fell to approximately $90.30 per barrel on Monday, down $6.30 or 6.5 percent, in a shortened Memorial Day session on CME Globex that closed at noon Central Time. ICE Brent settled near $96.14 per barrel in London, down $7.40 or 7.2 percent, in a full-length session unaffected by the U.S. holiday. Both benchmarks have retreated across four consecutive trading sessions as Washington and Tehran moved toward a framework agreement on the Strait of Hormuz.

The Framework Agreement on the Table

Washington and Tehran agreed in principle over the weekend to a two-part framework. Under the terms, Iran would reopen the Strait of Hormuz to commercial shipping and commit to disposing of its stockpile of highly enriched uranium. President Trump instructed his negotiating team not to rush into a formal agreement, signaling the deal has not yet closed.

Iran closed the strait to most commercial traffic on March 1, 2026, following the February 28 U.S.-Israeli strike on Iranian military targets. The IRGC declared complete control of the waterway by March 4, then began boarding, attacking, and mining vessels attempting transit. The International Maritime Organization has described the closure as the largest disruption to world energy supply since the 1970s oil crisis.

The $16 Per Barrel Hormuz Risk Premium

Brent crude traded at roughly $80 per barrel on February 27, the session before the U.S.-Israeli strike. Monday's settle of $96.14 per barrel implies a residual Hormuz risk premium of approximately $16 per barrel. Oil Authority calculates this gap as the market's combined assessment of three remaining risks: the probability the framework collapses before signing, the weeks-long delay in clearing the 600-plus stranded tankers from the Gulf, and Iran's demonstrated willingness to resume attacks if talks stall.

WTI peaked above $126 per barrel in mid-March after the blockade triggered force majeure declarations by Saudi Arabia, the UAE, Kuwait, Qatar, and Iraq. The U.S. Strategic Petroleum Reserve released approximately 10 million barrels during the crisis, the largest single withdrawal on record, helping to moderate domestic price spikes. Monday's WTI settle of $90.30 per barrel indicates the market has already priced out roughly $35 to $40 of the peak Brent crisis premium over the past two months.

Skepticism From Analysts and the October 2025 Precedent

Gaik June Goh, senior oil market analyst at Sparta Commodities, noted that a breakthrough appeared to have occurred on Saturday based on initial reports, according to Rigzone. A separate OilPrice.com commentary cited an analyst warning that traders should brace for a potential July price spike, cautioning against dismissing worst-case scenarios. The October 2025 precedent provides context: an earlier diplomatic breakthrough caused WTI to fall 5 percent before the decline reversed fully within 48 hours when those talks collapsed.

Henry Hub natural gas settled at $2.91 per MMBtu Monday, up 0.2 percent, as the Iran optimism reduced fears of a prolonged LNG supply shock. European natural gas (TTF) fell more than 5 percent on the same news, per OilPrice.com. The most recent reported Western Canadian Select differential stood near $16.25 per barrel below WTI per BOE Report data from mid-April; a return of Middle Eastern heavy crude to global markets would compete directly with WCS for refinery runs at U.S. Gulf Coast and Midwest facilities.

What a Deal Means for Physical Supply

A formal agreement, if it holds, would allow approximately 20 million barrels per day of seaborne crude to resume through the strait, against the roughly 9 million barrels per day of overland bypass capacity currently available. Approximately 600 tankers remain trapped inside the Persian Gulf and 240 more wait outside the strait, according to the 2026 Strait of Hormuz Crisis account. Clearing the queue and restoring normal Gulf export volumes would require several weeks of sustained open transit even after a formal ceasefire takes effect.

Any breakdown in negotiations would remove a significant portion of the risk premium that has already left prices since mid-March. Traders active in Monday's shortened CME session noted that prices remain sensitive to any headline from Tehran or Washington before a final agreement is signed. Saudi Arabia and other Gulf producers could not ramp exports to pre-crisis levels immediately; onshore terminal storage has been strained after months of reduced tanker offtake.