Oil Slumps After Conflicting Reports Over U.S.-Iran Deal


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude and product futures reversed course to settle 
lower Thursday (5/21) as reports that the U.S. and Iran were close to a deal to 
reopen the Strait of Hormuz conflicted with statements by Tehran that it was 
not ready yet for a peace agreement.

   Market volatility was also amplified by post-expiry position shifts on 
NYMEX, as traders rebalanced portfolios in the newly prompt July crude contract 
ahead of Monday's (5/25) Memorial Day holiday, triggering intraday swings 
across the energy complex.

   On the Middle East conflict, reports said Pakistani mediators had prepared a 
peace draft for Iran and the U.S. that will reinforce an existing ceasefire 
that lasted the past six weeks. The signing parties will agree not to target 
regional infrastructure and also guarantee freedom of navigation on the Hormuz 
and the wider Persian Gulf under a joint monitoring mechanism, the reports said.

   U.S. sanctions against Iran will be gradually lifted in return for Tehran's 
compliance to the deal, with negotiations on outstanding issues beginning seven 
days after the signing, the reports added.

   Energy markets tumbled on the news after rallying earlier on reports that 
Iran's Supreme Leader Ayatollah Mojtaba Khamenei had refused to transfer the 
country's enriched uranium to a third country accepted by the U.S.

   But just after the settlement of NYMEX trade at 2:30 p.m. ET,  Iranian media 
reported the country's president and army chief as not in agreement yet with 
the Pakistani mediation effort.

   NYMEX WTI for July delivery settled the day down $1.91 at $96.35 bbl, 
dropping 2% to extend the previous session's 6% slide.

   ICE Brent for July delivery closed down $2.44 at $102.58 bbl, also deepening 
Wednesday's (5/20) 6% retreat with a dip of 2%.

   Market participants said any further drop in crude prices would depend on 
Iran's permitting of vessels back on the Hormuz, a waterway it has blocked for 
most of the near three-month long war, crippling some 20 million bpd of 
petroleum liquids that account for a fifth of global daily supply.

   "Whatever happens, I see WTI holding at $85 and above in the distant future, 
and Brent at $90 and above," John Kilduff, partner at New York energy hedge 
fund Again Capital, told DTN.

   Among refined products, NYMEX ULSD for June delivery fell $0.1155 to finish 
at $3.9471 gallon, while June RBOB futures edged lower by $0.1078 to end at 
$2.2796 gallon.

   The US dollar index strengthened by 0.171 points to 99.185 against a basket 
of foreign currencies.




(c) Copyright 2026 DTN, LLC. All rights reserved.