Oil slides as Iran talks near ‘final stages’

Oil prices fell sharply on May 20, 2026 after U.S. President Donald Trump said negotiations with Iran were in the “final stages,” prompting traders to reassess geopolitical risk premiums. By 11:29 a.m. EDT, Brent (UKOIL) crude futures were down $4.76, or 4.28%, at $106.52 a barrel, while U.S. West Texas Intermediate (USOIL) declined $4.22, or 4.05%, to $99.93.

Both benchmarks were on track for their biggest daily declines in absolute and percentage terms in about two weeks. The drop interrupted a recent rally driven by disruptions in Middle Eastern supply and uncertainty around the outlook for Iranian exports.

Announcing progress in the talks, Trump said negotiations with Iran were in the “final stages” but coupled this with a warning: “Either have a deal or we’re going to do some things that are a little bit nasty, but hopefully that won’t happen.” The combination of apparent diplomatic momentum and ongoing threats left market participants cautious about the durability of any easing in tensions.

Traders weighed the possibility that a deal could eventually ease supply constraints against the risk that negotiations might fail and trigger new disruptions. This push and pull helped drive intraday volatility, even as prices moved decisively lower on the day.

Despite the price decline, indicators from the physical market continued to point to tight supply. The premium for Brent crude for delivery next month over contracts for delivery in six months was about $20 a barrel, down from peaks above $35 last month but still signaling strong near‑term demand relative to future supply.

Analysts highlighted that upside risk to prices remains significant. Citi said it expects Brent to rise to $120 a barrel in the near term. Wood Mackenzie estimated that Brent could approach $200 a barrel if the Strait of Hormuz remains largely shut through the end of the year, underscoring how sensitive prices are to any prolonged disruption in key shipping lanes.

Some movement of crude through the Strait of Hormuz has resumed, but volumes remain well below pre‑conflict levels. Three supertankers carrying about 6 million barrels of Middle East crude were reported crossing the strait on Wednesday after waiting in the Gulf for more than two months.

Even with these sailings, traffic through the chokepoint is far from normal. The number of vessels crossing the Strait remains well below the roughly 130 ships that transited daily before the conflict, highlighting the ongoing constraints on regional supply.

UAE state producer ADNOC’s chief executive, Sultan Al Jaber, said it would take at least four months to restore about 80% of pre‑conflict flows. His comments suggest that any normalization in exports from the region is likely to be gradual rather than immediate, even if diplomatic efforts with Iran progress.

Supply concerns are not limited to the Middle East. Russian Deputy Prime Minister Alexander Novak said some countries were lifting sanctions on Russian oil because global markets cannot function without it, according to the TASS news agency.

Novak’s comments underline the importance of Russian barrels to balancing global supply at a time when Middle East flows remain impaired and benchmarks continue to trade in backwardation. Together, these factors frame a market in which prices can swing sharply on shifts in geopolitical expectations, as illustrated by the reaction to Trump’s latest remarks on Iran.