Global oil prices tumbled on Monday (May 25) as a handful of stranded supertankers finally navigated the Strait of Hormuz, signaling a tangible thaw in the three month US-Iran conflict just as both sides zero in on a comprehensive peace deal.
Brent crude dropped 5.5 per cent in morning trading to US$97.90 a barrel, hovering around US$97.70 by the afternoon, as the geopolitical risk premium that has buoyed energy markets since late February began to deflate.
Ship-tracking data from LSEG and Kpler shows a trickle of LNG and crude carriers are now exiting the Gulf via an Iran-mandated transit route, escaping a blockade that has stranded roughly 20,000 seafarers.
The Bahamas-flagged LNG tanker Fuwairit crossed the strait on Monday and is scheduled to discharge in Pakistan on Tuesday (May 26), having loaded at Qatar’s Ras Laffan port in late March.
A second LNG carrier, the Al Rayyan, was recently spotted outside the strait between Iran and Oman, en route to China.
In the crude markets, the Very Large Crude Carrier (VLCC) Eagle Verona exited the waterway on Saturday (May 23). Chartered by Unipec, the vessel is carrying nearly 2 million barrels of Basrah crude loaded in late February and is expected to reach China’s Ningbo port by June 12.
The Eagle Verona is one of five Malaysian-linked ships permitted to exit following direct diplomatic appeals, joining three other VLCCs that departed last week with 6 million barrels of crude destined for China and South Korea.
Prior to the conflict, the strait processed roughly a fifth of global oil and liquefied natural gas supplies, averaging up to 140 daily passages.
While the physical movement of cargo has provided immediate market relief, the diplomatic negotiations behind the scenes remain complex.
US Secretary of State Marco Rubio noted negotiators have a “pretty solid thing on the table,” though he tempered expectations in New Delhi on Monday, noting the talks are “still a work in progress.”
US President Donald Trump characterized the talks as “proceeding nicely,” but cautioned negotiators against rushing the talks, framing the outcome as “a great deal for all or no deal at all.”
Complicating the final stretch, Trump is pushing for regional mediators, including Saudi Arabia, Qatar, Egypt, Jordan, Turkey, and Pakistan, to normalize relations with Israel by signing the Abraham Accords as a condition of the peace settlement.
Listen to Ajay Parmar and Andreas Schröder of ICIS discuss the growing volatility in global oil and gas markets as geopolitical tensions disrupt supply chains and reshape energy trade flows.
Parmar highlights how prolonged outages are tightening oil markets, while Schröder examines Europe’s rising LNG dependence, Asia’s growing energy influence and the risks tied to infrastructure disruptions in key exporters like Qatar.
Tehran, meanwhile, pushed back against the US timeline. Iranian foreign ministry spokesman Esmail Baqai confirmed an agreement was reached on a “large portion of the issues under discussion,” but poured cold water on an immediate resolution.
Even if a permanent treaty is signed this week, energy and shipping analysts warn that a return to pre-war market conditions is highly unlikely in the near term.
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