May 25, 2026, 7:24 AM

Oil prices fall 5% after Trump says Iran talks proceeding in a 'constructive manner'

Oil prices fell sharply on Wednesday, with benchmarks declining by over 5%, after U.S. President Donald Trump described negotiations with Iran as proceeding in a "constructive manner." Crude futures plunged over 5% while some benchmarks fell about 6% during the trading session.

The decline in crude prices was driven by hopes for a potential U.S.-Iran peace deal, which could ease geopolitical tensions in the Middle East. Such a deal could also lead to the reopening of the Strait of Hormuz, a crucial waterway for global oil shipments that has experienced disruptions.

President Trump indicated that negotiations with Iran to reopen the Strait of Hormuz are moving forward. He also stated that the U.S. would end the Iran war "very quickly" and that negotiations were in the "final stages." However, Trump emphasized the need for patience and warned against rushing the deal, maintaining the U.S. naval blockade on Iran.

The talks aim to end Iran's "de facto blockade" of the strategic shipping route, which has severely disrupted oil exports from the Middle East.

Iranian foreign ministry spokesperson Esmaeil Baghaei stated that Iran was ready to develop protocols for safe shipping traffic in cooperation with other coastal states.

Despite the optimism, investors remained wary about the outcome of peace talks, as disruption to Middle Eastern supply continued. Three supertankers were observed crossing the Strait of Hormuz on Wednesday, carrying oil bound for Asian markets. These vessels had been waiting in the Gulf for more than two months with 6 million barrels of Middle East crude on board.

Sultan Al Jaber, CEO of UAE's ADNOC, said it would take at least four months to return to 80% of pre-conflict flows.

In other market news, U.S. crude stockpiles fell last week. Amid the hopes for a peace deal, Asian markets also saw gains.

Sources