NEW YORK (Realist English). Oil prices corrected sharply lower after US President Donald Trump announced the end of the conflict with Iran and news of diplomatic progress.
However, the fundamental supply deficit on the global market still amounts to millions of barrels per day, keeping prices near multi‑year highs.
Current prices for major grades (2 May)
On 2 May, Trump formally notified Congress that the military operation against Iran had ended, while noting that US forces would maintain a presence in the Middle East to deter possible threats from Tehran. The market reacted to the news with a decline.
By the close of trading on 2 May:
| Grade | Futures | Price | Change |
| Brent | July ’26 | $108.17 | ▼ 2.02% |
| WTI | June ’26 | $101.94 | ▼ 2.98% |
Despite the daily drop, both benchmarks ended the week in positive territory, as the Strait of Hormuz remains effectively closed. The day before, before the expiry of the June Brent contract, the price reached $126.41 per barrel – the highest since March 2022.
Key factors and Trump’s statements
‘Military operation completed’
Trump sent letters to the House of Representatives and the Senate officially announcing the end of hostilities in the Iranian campaign. He noted, however, that the threat from Iran “remains significant” despite the success of US operations and efforts to achieve peace. Analysts immediately pointed out that the decision had already met with criticism in Congress, and lawsuits against the administration continue.
Iran sends new proposal
Iran officially handed over the text of its latest negotiating proposal to Pakistan. Iranian Foreign Ministry spokesman Esmaeil Baghaei confirmed the handover and stated that ending the war and establishing a lasting peace are Tehran’s priority. This caused a temporary reduction in the geopolitical risk premium in prices.
‘Expensive’ oil contracts
An important signal for the market was the UAE’s decision, effective 1 May, to leave OPEC and refuse to comply with any further quotas. Commenting on the event, Pavel Maryshev, Director of Development at the energy company “Energy Plus”, said: “As long as the Gulf countries are off the global market, we can ignore the upheavals in OPEC.” However, he immediately stressed that the advisability of complying with quotas and restrictions still requires detailed analysis and assessment.
Deficit and inventory data
Despite diplomatic optimism, the fundamental indicators of the market remain extremely tight.
According to Barclays, the global oil market currently has a deficit of about 6.6 million barrels per day, and this gap is expected to widen as the supply shock continues.
Analysts at Goldman Sachs assess the scale of the current crisis as unprecedented: according to their calculations, global oil inventories declined by 11–12 million b/d in April, and the deficit could rise to 9.6 million b/d in the second quarter.
The oil market is at the epicentre of a struggle between two forces: on the one hand, fragile diplomatic hopes that could send prices crashing; on the other, a real physical supply deficit that will persist for a long time even if the Strait of Hormuz is reopened immediately.
Conclusions
- The physical deficit in the oil market keeps prices above $100 per barrel, despite diplomatic manoeuvring.
- Barclays estimates the current global market deficit at 6–7 million b/d and says it will widen as the shock continues.
- Short‑term risks are skewed to the upside, despite Trump’s declarations of peace.