LONDON/NEW YORK — Global oil prices fell on Friday, May 29, as traders responded to reports of progress in negotiations between the United States and Iran regarding the reopening of the Strait of Hormuz, a critical global oil shipping route.
On Thursday, May 28, U.S. and Iranian negotiators agreed to extend their current ceasefire and lift shipping restrictions in the strategic waterway. However, the agreement requires final approval from U.S. President Donald Trump, and Iranian state media indicated that no deal has been formally finalized.
Brent crude futures declined approximately 2 percent and were on track for their steepest weekly decline since early April. West Texas Intermediate crude dropped to around $87 per barrel. The prospect of increased oil flow through the Strait of Hormuz, through which roughly one-fifth of global oil consumption passes, has eased concerns about supply disruptions.
Global stock markets responded positively to the developments. The MSCI world stocks index rose 0.4 percent to a record high, with major Asian indices leading gains. Japan’s Nikkei 225 gained 2.5 percent, while South Korea’s KOSPI climbed 3.5 percent. Technology shares, particularly chipmakers, drove much of the advance after Dell Technologies raised its annual revenue forecast, citing strong demand for artificial intelligence infrastructure.
The S&P 500 closed at a record 7,563.63 points on Thursday, May 28, extending its year-to-date gain. European markets also moved higher, with the pan-European STOXX 600 rising 0.4 percent.
“The market’s already taking the view that a deal’s going to be done and the Strait is going to be open,” said Jason Wong, senior market strategist at BNZ in Wellington. However, analysts cautioned that a comprehensive agreement is unlikely to immediately reverse inflationary pressures from elevated fuel prices that have persisted in recent months.
The U.S. 10-year Treasury yield stood at 4.45 percent, reflecting continued uncertainty about monetary policy amid mixed economic signals. French inflation accelerated at its fastest pace in more than two years in May, according to preliminary data released on May 29 by the national statistics agency INSEE.
Meanwhile, traders continued to monitor other geopolitical developments, including a reported incident in which a drone entered NATO member Romania’s airspace during overnight Russian operations against Ukraine on May 28–29, injuring two people.