On May 27, 2026, oil prices fell sharply after Iranian state media indicated that a draft agreement between Iran and the United States could lead to the resumption of commercial traffic through the Strait of Hormuz within a month. Following this announcement, West Texas Intermediate (WTI) oil futures fell by approximately 4.6%, settling at $89.55 per barrel. Brent crude also experienced a decline, trading down over 3.7%.

The draft memorandum reportedly suggests that the U.S. would lift its naval blockade on Iran in exchange for Iran restoring shipping operations through the strait to pre-war levels. The Revolutionary Guards are expected to manage maritime traffic in cooperation with Oman, although military vessels will not be included in this agreement.

Secretary of State Marco Rubio stated that the U.S. is willing to give negotiations with Iran "every chance to succeed," while also indicating that President Donald Trump has alternatives if discussions do not yield results. This dual approach has contributed to market volatility as investors weigh the prospects of improved supply against continuing geopolitical tensions.

The Strait of Hormuz is a significant chokepoint, with about 20% of the world's oil supplies traveling through this route. Analysts caution that even if an agreement is reached, it may take several months to normalize oil flows. The CEO of Abu Dhabi National Oil Company, Sultan Ahmed al-Jaber, mentioned that it could take four months to ramp oil flows back to 80% of normal levels, and full normalization might not occur until 2027.

While hopes rise for the reopening of the strait, the situation remains fluid, with ongoing tensions between Iran and the U.S. and the potential for military responses from either side complicating the diplomatic landscape. Market reactions continue to reflect uncertainty as investors remain vigilant regarding fluctuating oil prices amidst changing geopolitical dynamics.