Oil prices fell by more than $5 a barrel on Monday after statements from U.S. President Donald Trump boosted market expectations of a possible agreement with Iran that could ease risks to energy supplies through the Strait of Hormuz.

Brent crude futures fell $5.09, or 4.9%, to $98.45 a barrel by 07:05 GMT. Similarly, U.S. West Texas Intermediate crude fell $5.22, or 5.4%, to $91.38 a barrel.

Both benchmarks touched their lowest levels since May 7 during the session.

On Saturday, Trump said that Washington and Tehran had made significant progress in negotiations over a memorandum of understanding for a peace agreement that could eventually lead to the reopening of the Strait of Hormuz.

The Strait of Hormuz is one of the world’s most critical energy routes, with roughly one fifth of global oil and liquefied natural gas shipments passing through it before the conflict began.

Saul Kavonic, an analyst at MST Marquee, said markets are beginning to see “some light at the end of the tunnel,” despite ongoing risks surrounding the deal and the security of the strait, adding that this sentiment is weighing on oil prices in the short term.

However, negotiations remain uncertain. Trump said on Sunday that he had instructed his representatives not to rush into any agreement with Iran.

Warren Patterson, a commodities analyst at ING, noted that markets have seen similar negotiation cycles in the past that ultimately failed, which could encourage traders not to overreact.

Analysts expect it may take several months for oil flows through the Strait of Hormuz to fully resume, due to the need to repair oil and gas infrastructure damaged during the conflict.

Meanwhile, elevated prices have encouraged US energy companies to increase the number of oil and natural gas drilling rigs for a fifth consecutive week, marking the longest streak of gains since February 2025.

Five key facts

• Brent crude fell 4.9 percent to 98.45 dollars per barrel.
• US West Texas Intermediate crude fell 5.4 percent to 91.38 dollars per barrel.
• Prices hit their lowest level since May 7.
• Around 20 percent of global oil and LNG trade passed through the Strait of Hormuz before the conflict.
• US energy companies raised drilling rigs for a fifth straight week, the longest increase since February 2025.