Oil Tumbles as Iran Deal Hopes Lift Markets

The New York Times, BBC, Bloomberg, the Wall Street Journal, and AP contributed to this report.

Oil prices dropped hard on Monday, while Asian stocks climbed, after fresh signs that Washington and Tehran may be closing in on a deal that could cool the war between the US-backed side and Iran.

US Secretary of State Marco Rubio said in India that negotiators had a “pretty solid thing on the table” and that an agreement could come as soon as Monday. That was enough to jolt markets. Brent crude slid 5.5% to $97.90 a barrel in early trading, while US crude fell 5.9% to $90.93.

The biggest prize in any deal would be the Strait of Hormuz. President Donald Trump has said the agreement would include reopening the key shipping route, which carries roughly a fifth of the world’s oil and liquefied natural gas. Iran said the two sides had been moving closer in recent days, though its foreign ministry also warned that major gaps remained and accused the US of sending mixed signals.

Trump tried to cool expectations a bit. After earlier hinting a deal was close, he said negotiators should not rush. Still, he said talks were moving in a “constructive manner,” and told Truth Social that both sides had to “take their time and get it right.” He also said he had spoken with Saudi, Emirati and Qatari leaders, along with Israeli Prime Minister Benjamin Netanyahu.

Markets clearly heard the optimism louder than the caution. Japan’s Nikkei 225 jumped above 65,000 for the first time, led by hopes that the Strait might reopen soon. Across Europe, stocks also edged higher, while oil dropped more than $4 a barrel. The US and UK markets were shut for holidays.

Even so, traders are not calling the all-clear. Oil prices are still well above where they were before the conflict, and analysts say supply chains through the Gulf could stay fragile for a while. Shipping executives say vessels may take time to move back into the region, especially with security risks still hanging over the strait.

For now, the market is reacting to the possibility of relief. Whether that turns into a real peace dividend depends on the next round of talks – and on whether the deal actually holds.