Oil fell nearly 7% on Monday as US-Iran peace talks in Doha raised hopes for a Hormuz reopening, though analysts cautioned that normalising flows could take months even if a deal is reached. Iran’s chief negotiator and foreign minister were in Doha for talks with Qatar’s prime minister on the outlines of a deal to end a conflict now in its fourth month. Both sides described progress on a memorandum of understanding that would pause hostilities and give negotiators sixty days to finalise a comprehensive agreement.
The optimism was real but carefully hedged. Analysts captured the mood plainly: the market was beginning to price in the prospect of oil moving through the strait again, even before any agreement was signed. But some were cautious, noting that talks had repeatedly come close to a breakthrough before unravelling on details, and that the strait remained closed.
On Truth Social, Donald Trump said negotiations were going well, while warning that failure would bring fresh military action. He also used the post to encourage Arab and Muslim states to join the Abraham Accords, the normalisation framework brokered during his first term, and suggested that a successful deal with Iran, particularly one involving the surrender of nuclear material, could substantially reduce the region’s risk premium. Iran’s foreign ministry pushed back on the nuclear dimension, saying that issue was not currently part of the talks.
The physical picture remains sobering. The current supply shortfall is circa 10 to 11 million barrels per day, a figure that would not resolve quickly even under the most optimistic diplomatic scenario. Damaged oil and gas infrastructure across the region would require months of repair before production could be meaningfully restored, meaning inventory draws would continue well into any post-deal period.
There were, however, small signs of life. Ship-tracking data showed three liquefied natural gas tankers had recently passed through the strait, bound for Pakistan, China and India. A supertanker carrying Iraqi crude, stranded for nearly three months, also made the transit toward China. These movements do not yet constitute a reopening, but they confirm the waterway is not entirely sealed.
The coming days will test whether the Doha talks produce anything durable, or whether this marks another false start in a conflict that has already reset global energy flows and kept a substantial portion of Middle Eastern crude off world markets since February.
Is this another round of parrots talking?
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A near 7% decline in oil prices on thin Memorial Day and European holiday volumes reflects how heavily the market has been pricing in Hormuz closure risk. Progress toward a memorandum of understanding between Washington and Tehran has prompted traders to begin unwinding that premium, though the move may be premature. Analysts warn that even a signed deal would not immediately restore the roughly 10 to 11 million barrels per day of crude currently offline, with production infrastructure repairs expected to take months
