LONDON (Realist English). Global energy prices closed lower on May 30 amid conflicting signals from the Persian Gulf. After several weeks of gains, oil prices began to correct as investors started pricing in the possibility of a memorandum of understanding between the United States and Iran and the potential reopening of the Strait of Hormuz.
However, confidence in a lasting agreement remains limited. A final decision in Washington has once again been postponed, while negotiators continue to disagree on several key issues.
Prices: Geopolitical Premium Leaves the Market
On Friday, July Brent crude fell 1.77% to $92.05 per barrel. U.S. benchmark West Texas Intermediate (WTI) declined 1.54% to $87.36 per barrel. For the month of May, WTI lost nearly 8%, marking its first monthly decline since December 2025.
The European gas benchmark TTF also fell 2.03% as geopolitical tensions appeared to ease.
The sell-off followed reports that Washington and Tehran had reached preliminary agreement on a draft 60-day ceasefire memorandum. Under the reported framework, Iran would clear mines from the Strait of Hormuz within 30 days and refrain from charging transit fees, while the United States would gradually lift its naval restrictions on Iranian ports and ease sanctions, allowing Tehran to increase oil exports.
Trump Postpones Final Decision
Uncertainty persisted after a two-hour meeting in the White House Situation Room on May 29 involving senior administration officials, intelligence representatives, and diplomats ended without a final decision.
Although Donald Trump stated that “agreement has already been reached on other, less important issues” and said he was preparing to make a “final decision,” The New York Times reported that the U.S. president had not yet approved the proposed deal.
Tehran is also projecting cautious optimism. Iranian Foreign Ministry spokesman Esmaeil Baghaei confirmed that exchanges of messages between the parties are continuing but stressed that no agreement has yet been finalized.
Meanwhile, the semi-official Fars news agency rejected Trump’s assertion that the issue of frozen Iranian assets had been removed from the agenda. According to Fars, the release of $12 billion remains a prerequisite for the next round of negotiations.
Fundamental Factors: The Buffer Is Nearly Exhausted
Despite diplomatic optimism, physical market indicators continue to send warning signals. The inventories that helped absorb the initial shock of the conflict are being rapidly depleted.
According to the U.S. Energy Information Administration (EIA), commercial crude oil inventories fell by 3.3 million barrels during the week ending May 22, reaching 441.7 million barrels — 2% below the five-year average.
The Strategic Petroleum Reserve (SPR) declined by 9.1 million barrels over the same period to 365.1 million barrels.
Gasoline inventories remain 6% below the five-year average, while distillate inventories are 11% below average levels.
Globally, the picture is equally tight. According to the International Energy Agency (IEA), observed global oil inventories fell by 129 million barrels in March and by another 117 million barrels in April.
Forecasts and Estimates: From $75 to $150 per Barrel
Major investment banks and market analysts continue to offer widely differing forecasts for the direction of energy prices.
Chevron CEO Mike Wirth warned that upward pressure on oil prices is likely to intensify in the coming weeks.
“The shock absorbers and buffers are steadily being depleted, and the market’s ability to absorb this imbalance today is significantly reduced,” he said.
Analysts at Citi assume in their base-case scenario that the conflict and disruptions in the Strait of Hormuz could continue for another four to six weeks before meaningful negotiations begin. In the short term, Brent prices could rise to $120 per barrel. However, as supply conditions normalize and geopolitical tensions ease, Citi expects prices to fall to $75 per barrel by the end of 2026.
Goldman Sachs has warned of the risk of a significant supply shock in global energy markets if disruptions in the Strait of Hormuz persist, potentially supporting elevated prices over the longer term.
Matt Maley, chief market strategist at Miller Tabak, emphasized that the risk of negotiations collapsing remains substantial and that volatility is likely to stay elevated.
“We still see a risk that the deal could fall apart,” he said, although he added that an extension of the ceasefire remains the most likely outcome.
Veteran market strategist Louis Navellier also expects a positive market reaction if even a temporary agreement is reached.
“Even if it is only a 60-day agreement that allows shipping traffic to resume through the strait, the market should experience a relief rally because serious supply disruptions are rapidly approaching,” he said.
The market remains highly sensitive to developments in Washington, Tehran, and the Persian Gulf. A breakdown in negotiations could quickly push prices back into triple-digit territory, while a successful agreement could accelerate the decline toward pre-conflict levels. The coming days are likely to be decisive for the future direction of global energy markets.
