By Ronnie Harui

Oil prices declined and Asian equity markets advanced Monday afternoon amid hopes for a U.S.-Iran deal to end the conflict.

A U.S. official said Sunday that there's an agreement in principle under which Iran would reopen the Strait of Hormuz, The Wall Street Journal reported, citing the official. Seafarers said Sunday that some vessels stuck in the Persian Gulf have already begun moving toward the strait on expectation of a deal that reopens the key waterway through which one-fifth of the world's oil is typically transported.

Meanwhile, President Trump said in a Truth Social post on Sunday that he was in no hurry to complete an end-of-conflict agreement with Iran. "Both sides must take their time and get it right," he said.

There's "optimism that the U.S. and Iran were moving closer to a peace deal," analysts at CIMB's Treasury and Markets Research said in a report. President Trump is "guiding that Washington and Iran had 'largely negotiated' a [memorandum of understanding], with prospects of reopening the Strait of Hormuz," the analysts added.

Front-month West Texas Intermediate crude oil futures dropped 5.7% to $91.11 per barrel and front-month Brent crude oil futures declined 5.4% to $97.96 per barrel, ICE data showed.

Reopening the Strait of Hormuz would ease oil-supply disruption concerns and alleviate inflationary pressures. This could in turn spur purchases of risky assets and provide central banks more scope to keep interest rates on hold or even consider rate cuts.

Equity markets across most of Asia advanced. Japan's Nikkei Stock Average climbed 3.0%, Singapore's FTSE Straits Times Index added 0.4%, and China's Shanghai Composite gained 0.6%. Markets in Hong Kong and South Korea were closed for a public holiday.

"U.S.-Iran de-escalation hopes may support risk sentiment and weigh on oil/yields," OCBC Group Research's Christopher Wong said in a research report. "High-beta AUD, KRW and TWD may benefit first from any risk relief," the FX strategist added.

Government bonds in the Asia-Pacific region also rose in price terms. Yields on Japan's 10-year government bonds fell 5.5 basis points to 2.705%, Australia's 10-year sovereign securities declined 5 basis points to 4.8750%, and New Zealand's 10-year government debt dropped 5 basis points to 4.6430%. Bond yields move inversely to prices.

Meanwhile, the U.S. dollar fell 0.7% to 1,509.46 Korean won and dropped 0.3% to 31.364 Taiwan dollars, while the Australian dollar rose 0.6% to $0.7165, LSEG data showed.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

May 25, 2026 00:53 ET (04:53 GMT)

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