Oil posts worst month since the pandemic as fragile US-Iran ceasefire framework awaits Trump approval
Crude oil closed May with its steepest monthly fall since the Covid-19 pandemic, as traders weighed the prospect of a durable US-Iran ceasefire against fresh military exchanges. Brent ended the month near USD 92 a barrel, down roughly 19% over May and about 20% from its 2026 peak.
A deal almost done, but not signed
US and Iranian negotiators are understood to have largely agreed the terms of a 60-day memorandum of understanding to extend their ceasefire and open talks on Iran’s nuclear programme, under which the Strait of Hormuz would be demined and reopened. The waterway normally carries around 20% of the world’s energy supply. Crucially, the framework remains unsigned: US sources say it still awaits President Donald TRUMP’s approval. Iranian state media claimed a draft would restore pre-war traffic managed by Iran and Oman, but the White House dismissed that as a complete fabrication, and Trump said no nation would control shipping through the strait.
Still volatile
The situation remains fragile. On 28 May, US Central Command said Iran launched ballistic missiles towards Kuwait that were intercepted, with drones also sent towards the strait. Analysts at UBS cautioned there was still little sign of improved vessel traffic, describing crude loadings inside the Gulf as extremely low.
Why Europe is watching
For the European Union the stakes are direct. The conflict has been the main driver of the energy-price spike that pushed euro area inflation to 3% in April, the chief reason the European Central Bank has shifted towards raising rates on 11 June, and the backdrop to Brussels’ AccelerateEU relief plan. A lasting reopening of Hormuz would ease imported inflation and relieve hard-pressed industry; a breakdown would deepen the squeeze.
