(May 29): Oil edged lower after the US and Iran tentatively agreed to extend a ceasefire by 60 days, according to a person familiar with the matter, potentially allowing shipments through the Strait of Hormuz to resume.
West Texas Intermediate dropped towards US$88 a barrel, after a volatile session on Thursday, while global benchmark Brent closed near US$94. President Donald Trump has yet to agree to the terms, according to the person, after Axios reported that shipping through the strait would be “unrestricted”.
Still, Vice President JD Vance told reporters that it was too early to know “when or if” a deal with Iran would be reached. Earlier, Treasury Secretary Scott Bessent said only that “the teams have been going back and forth” when pressed if an interim agreement has been clinched.
US crude is headed for the biggest monthly loss in more than a year after optimism built around expectations that some form of accord would be reached, although the warring parties have often before hailed progress only for the stalemate to drag on. The effective closure of Hormuz — which has been subject to blockades by both Washington and Tehran — has triggered an unprecedented global energy shock, with millions of barrels of daily oil supply shut off.
“We’re slowly and excruciatingly pulling towards what is being framed as a deal,” said Aaron Stein, president of the Foreign Policy Research Institute. “If it’s an extension of the ceasefire, then nothing fundamentally changes. What will differentiate this from all those that have come before it, is it does seem like there’s at least consensus on the need for a lift-for-lift on the two blockades.”
At this stage, it remains unclear how sticking points in the negotiations — including the Islamic Republic’s nuclear programme, Iran retaining control over Hormuz, and sanctions relief — stand to be addressed. The waterway reopening, and Iran turning over highly enriched uranium to end its nuclear programme were Trump’s “red lines” necessary for any pact, Bessent said.
See also: Oil spikes as renewed Gulf attacks threaten fragile ceasefire
Uploaded by Isabelle Francis
