Oil prices slid hard Wednesday after President Donald Trump said negotiations with Iran are in the “final stages,” fueling fresh hopes that the Strait of Hormuz could reopen and ease the supply crunch.
West Texas Intermediate futures fell more than 6% to $97.74 per barrel by 12:58 p.m. ET. International benchmark Brent futures also dropped nearly 6% to $104.62 per barrel.
Trump told reporters the administration is in the “final stages” of talks, according to a pool report. The comments came after Trump said earlier this week he called off renewed military strikes against Iran to give diplomacy more runway, at the request of Gulf Arab allies.
The market has been whip-sawed for weeks by the back-and-forth between Washington and Tehran. Trump has repeatedly projected confidence about reaching a deal and ending the war quickly, only for tensions to flare again and shipping to remain snarled.
BREAKING: US oil prices fall over -7% to $97/barrel after President Trump says the US is in “final stages” of talks with Iran. pic.twitter.com/9i8FDFcUCb
— The Kobeissi Letter (@KobeissiLetter) May 20, 2026
Iran and the U.S. have been locked in a high-stakes stalemate as Tehran blockades the Strait of Hormuz and Washington blockades Iranian ports. Hormuz is one of the world’s most important corridors for oil and gas flows, and even partial disruption can rattle prices worldwide.
Wall Street has been watching for any signal that the chokepoint might reopen. Analysts have warned traders may be getting ahead of themselves by pricing in a quick resolution while the fundamentals still point to risk.
Citibank warned Tuesday that the market is underpricing the danger of a prolonged disruption to oil supplies through Hormuz. It expects Brent to trade up to $120 per barrel in the near term.
“It appears increasingly likely, in our view, that the Iranian regime will disrupt SoH flows for some time,” Citi analysts told clients.
On the more dire end of the spectrum, oil prices could approach $200 per barrel in a worst-case scenario where Hormuz remains closed through the end of the year, according to an analysis published by Wood Mackenzie on Wednesday.
But Wood Mackenzie said prices would drop sharply if Washington and Tehran strike a quick peace deal that opens Hormuz by June. Spot Brent prices would ease to around $80 per barrel by the end of 2026 in that scenario, the consulting firm said.
For now, traders are betting Donald Trump’s “final stages” talk points to a path out of the crisis. Whether that optimism holds will hinge on what, if anything, changes on the water in Hormuz and at the negotiating table in the days ahead.
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