LONDON (Realist English). Global energy prices closed sharply lower on May 27 amid conflicting signals over the prospects of US-Iranian negotiations. Oil prices hit their lowest levels since late April, while European gas continued to decline as investors responded to hopes that the Strait of Hormuz could soon reopen.
Prices: Oil Falls Below $95
July Brent futures fell 4.76% to $94.84 per barrel. For the first time since April 21, the benchmark slipped below the $95 mark. A day earlier, Brent had risen 3.58% to $99.58 amid expectations that Washington and Tehran could sign a memorandum of understanding.
US West Texas Intermediate (WTI) July futures lost 5.7%, closing at $88.54 per barrel.
The European gas hub TTF declined 5.1% to €45.165 per MWh. By contrast, the US Henry Hub rose 5.1% to $3.06 per MMBtu amid stronger domestic demand.
Geopolitics Remains the Main Driver
Markets continue to react sharply to developments in the Persian Gulf. On the one hand, US President Donald Trump stated that a deal with Iran was “largely agreed.” According to media reports, Tehran has received a draft 60-day memorandum of understanding предусматривающий phased reopening of the Strait of Hormuz and a freeze on Iran’s nuclear programme.
At the same time, military escalation continues. On May 26–27, US forces carried out what Washington described as “defensive” strikes on IRGC positions near Bandar Abbas, while Iran reportedly launched drone attacks against US vessels in the Gulf of Hormuz. The Islamic Revolutionary Guard Corps warned that “no agreement will be reached as long as the military adventures continue.”
Supply Deficit Persists
Despite the decline in prices, the physical oil market remains tight. According to analysts, exports through the Strait of Hormuz are still running at only about 5% of pre-war levels. Global oil inventories continue to shrink at a record pace, with daily drawdowns reaching 8.7 million barrels since the beginning of May.
Expert Forecasts: From $80 to $150 per Barrel
Analysts at major investment banks maintain cautious but sharply divergent forecasts, underlining the market’s dependence on the outcome of the negotiations.
- JPMorgan sees a “base-case” scenario in which prices could fall to $80–90 per barrel after the strait reopens, but warns that escalation could push prices as high as $150.
- Citigroup argues that the market is underestimating the risk of prolonged supply disruptions. The bank expects prices to rise to $120 in the short term and potentially to $150 if the strait reopens only gradually in the third quarter. Citi also forecasts that global oil inventories could decline by 1 billion barrels in 2026.
- Goldman Sachs points to record inventory drawdowns and does not rule out another surge in prices if negotiations drag on.
- Morgan Stanley describes the situation as a “race against time”: if the strait remains closed into June, the factors currently restraining prices could weaken significantly.
- Wood Mackenzie says Brent could fall to $80 by the end of the year if an agreement is successfully reached.
- Saudi Aramco warns that even if the conflict ends immediately, the global energy market is unlikely to stabilise before 2027.
Global energy markets remain frozen in anticipation. Diplomatic progress is exerting downward pressure on prices and fuelling hopes for the return of Iranian oil to world markets. However, military incidents and the continuing supply deficit are preventing a deeper decline. The coming days — when the fate of the memorandum is expected to be decided — will likely determine the next direction of prices: either towards $80 per barrel or back into triple-digit territory.
