OIL dropped on Monday (May 25) as the US and Iran edged toward a deal, although US President Donald Trump said that Washington’s blockade of the Strait of Hormuz would remain until an agreement was completed.

Global crude benchmark Brent fell as much as 4.2 per cent to US$99.16 a barrel, after declining more than 5 per cent last week, while West Texas Intermediate was near US$92.

Trump said in social-media posts he would not “rush” into a deal, which “isn’t even fully negotiated yet.” Any final approval of an agreement by both sides may take several days, according to senior US officials.

Still, it remains unclear how key differences, including the fate of the Islamic Republic’s nuclear programme and Teheran’s calls for sanctions relief, will be addressed in any potential deal. Iran’s semi-official Tasnim news agency said the draft agreement could still collapse because the US was obstructing some key clauses, including Iran’s demand that its assets be unfrozen.

Global energy markets have been upended by the crisis, which began in February when the US and Israel attacked Iran. The conflict spread rapidly across the Persian Gulf region, damaging oil-and-gas infrastructure and forcing regional producers to shut in millions of barrels of daily crude supplies. Hormuz – which links the region to world markets – has been subject to a double blockade, with curbs imposed by both Teheran and Washington.

A full reopening of Hormuz – which in peacetime typically handled around a fifth of the world’s oil and liquefied natural gas supplies – would be a huge relief for energy importers across Asia, including China, Japan, India and South Korea.

Trump has been facing growing domestic political pressure to end the conflict, particularly ahead of the November midterm elections that will determine control of Congress. The war has boosted the cost of fuels, with average US gasoline prices hitting the highest since 2022 in May.

Kevin Hassett, President Donald Trump’s chief economic adviser at the White House, told Fox News on Sunday that he expects energy prices to drop once there is a deal with Iran, which could then create space for the US Federal Reserve to lower interest rates. “We expect energy prices, as soon as there’s a deal, to plummet,” Hassett said.

Trading in oil may be lower than usual on Monday, with some traders away from their desks for public holidays in the US and the UK. BLOOMBERG