MW Oil prices tumble as deal to end Iran war appears close, though Trump says there's no rush

By Mike Murphy

President Donald Trump delivers remarks Friday in Suffern, N.Y.

Oil prices were sharply lower and stock futures surged after weekend reports that the U.S. appears close to reaching an agreement that would end the war with Iran and reopen the strategic Strait of Hormuz.

The New York Times reported Sunday that the U.S. and Iran agreed in principle to cease hostilities and fully reopen the strait, with the issue of Iran's nuclear materials to be negotiated later. According to the Times, U.S. officials stressed the deal was not yet finalized and still needed the approval of President Donald Trump and Iran's supreme leader.

In a social-media post Sunday morning, Trump said that while "negotiations are proceeding in an orderly and constructive manner ... I have informed my representatives not to rush into a deal in that time is on our side." He added that the U.S. blockade on Iranian ports would continue until a deal is finalized.

On Monday, Trump added that "Negotiations with the Islamic Republic of Iran are proceeding nicely!" and that "it should be mandatory" that other Middle East countries sign onto the Abraham Accords normalizing relations with Israel.

Iranian officials said that while some understandings had been reached, there was still much work to be done before an agreement could be signed, the Associated Press reported.

West Texas Intermediate crude for July delivery (CLN26) (CL.1) fell more than 6% on Monday, near $91 a barrel, while Brent (BRNN26) (BRN00), the global benchmark, fell to around $96 a barrel. Meanwhile, U.S. stock-index futures rose, with Dow Jones Industrial Average futures (YM00) up more than 400 points, or 0.9%, late Monday. S&P 500 futures (ES00) and Nasdaq-100 (NQ00) futures also made strong gains. The U.S. stock and bond markets are closed Monday for the Memorial Day holiday.

"Markets are behaving as though a full Iran breakthrough already exists, even though the hardest parts of the negotiation remain unresolved," Stephen Innes, managing partner at SPI Asset Management, wrote in a Monday note.

"Global markets have once again strapped themselves to the same rocket fueled by diplomacy headlines, AI mania and the relentless fear of missing the next melt higher," Innes said.

The Associated Press reported the deal would allow Iran to sell oil by waiving sanctions, and billions in frozen Iranian funds would be released during a 60-day negotiation period. Some Republicans have already criticized details of the potential agreement, saying it leaves Iran off too easily.

Also read: What to know about the emerging deal to end the Iran war

"Don't listen to the losers, who are critical about something they know nothing about," Trump said Sunday on social media, adding: "I don't make bad deals!"

Despite Trump's remarks that he's in no hurry to end the war, many experts say the clock is ticking, and a deal needs to be made soon before further damage is inflicted on the world economy.

"The longer the world's most important energy artery remains partially constrained, the greater the probability that this oil shock mutates from a commodity story into a broader financial crisis, feeding directly into inflation expectations, consumer strain, tighter financial conditions, and eventually recession risk," Innes said in a weekend note.

If finalized, the agreement would once again allow the free flow of oil and gas from the Persian Gulf, easing the global energy crisis that started when Iran effectively shut the Strait of Hormuz to shipping traffic shortly after the war began in late February.

Oil prices have shot roughly 70% higher since the start of the war, with West Texas Intermediate crude, the U.S. benchmark, settling Friday around $97 a barrel, while Brent crude, the global standard, closed around $100 a barrel.

Still, experts have warned that it will take months for the oil and gas industry to return to pre-war levels, as production facilities must be brought back up to speed.

"Even if the strait were to effectively open tomorrow, you can't turn the faucet back on," Angie Gildea, global head of oil and gas at KPMG, told MarketWatch in March. "With wells shut in and damage to natural-gas infrastructure, we'll have longer-lasting impacts that will prop up the price of oil for at least a few months to come."

The rising costs of energy have trickled down to nearly every part of the economy, from gas prices to shipping costs, and rising inflation fears have pushed long-term U.S. bonds yields to multi-decade highs.

Read more: Americans are paying $2 billion more for gas this Memorial Day weekend than they did last year

-Mike Murphy

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May 25, 2026 18:23 ET (22:23 GMT)

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