Oil prices fall 1% on US-Iran ceasefire MoU reports 2026

Oil slips as ceasefire extension chatter returns

Global crude prices eased on Friday morning after reports that Iran and the United States have agreed to extend a fragile ceasefire. The immediate trigger was renewed optimism that supply disruption risks linked to the Strait of Hormuz could ease. The mood shift came even as the broader US-Iran standoff remains unresolved, keeping traders sensitive to headlines. Market participants have been pricing geopolitical risk heavily over the past two weeks as shipping constraints tightened. Any indication that tankers can move more freely through the Strait tends to show up quickly in futures prices. The latest move was modest in percentage terms, but it followed multiple sharp swings earlier in the week. Those swings reflected alternating signals on whether restrictions would persist or unwind.

What Axios reported about a proposed 60-day MoU

Axios reported on Thursday that US and Iranian negotiators reached a 60-day memorandum of understanding to extend the ceasefire and open talks on Iran’s nuclear programme. The report said US President Donald Trump had not yet given final approval. According to Axios, the proposed MoU would state that shipping through the Strait of Hormuz will be “unrestricted”. It also said there would be no tolls. The report added that Iran would be required to remove all mines from the strait within 30 days. Axios also said the US naval blockade would be lifted, but only in proportion to the restoration of commercial shipping. These details, if implemented, would directly affect perceived supply risk because the Strait is a key transit point for global energy flows.

Friday morning prices: Brent and WTI trade lower

At 8.40 am India time, the July Brent contract on the Intercontinental Exchange traded at $12.86 a barrel, down 0.91% from its previous close. The July West Texas Intermediate contract on Nymex fell 1.24% to $17.73 a barrel. Traders appeared to treat the Axios report as a potential step toward restoring movement through the Strait, which carries a significant share of global flows. But the price decline also suggests markets were balancing optimism with uncertainty on approvals and implementation. The price points indicated a pullback from earlier highs that were driven by fear of prolonged disruption.

Trump comments and the earlier risk premium unwind

Investor sentiment improved after Trump said Washington and Iran had “largely negotiated” a memorandum of understanding on a peace deal that could reopen the Strait of Hormuz. That set off a broader unwind of the risk premium built into crude over the prior sessions. In that earlier reaction, Brent fell 5.65% to $17.69 per barrel while WTI slipped 5.76% to $11.04 per barrel. The move reflected how quickly speculative positioning can reverse when traders see a path to normal shipping. It also showed that prices were reacting not only to physical disruptions but to the probability of those disruptions easing. Even so, subsequent sessions continued to show large intraday ranges as the situation remained fluid.

Mid-week: stalled talks, restrictions, and higher volatility

Oil prices were marginally lower on Thursday after big gains in the previous session, as peace talks were described as stalled and both sides maintained restrictions through the Strait of Hormuz. Brent futures fell 15 cents to $101.76 a barrel, after settling above $100 for the first time in more than two weeks on Wednesday. WTI futures fell 14 cents to $12.82. The same period saw reports that Iran seized two ships in the Strait on Wednesday, tightening its grip on the waterway. Separately, shipping and security sources said the US military intercepted at least three Iranian-flagged tankers in Asian waters and redirected them away from positions near India, Malaysia and Sri Lanka. These operational disruptions helped keep the market on edge even when ceasefire headlines sounded constructive.

Why the Strait of Hormuz remains central to pricing

The Strait of Hormuz carries about 20% of global oil and LNG supplies, making it a key choke point for energy markets. Reuters reported that activity was minimal at one point, with only three ships passing in the previous 24 hours. Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, was quoted by Reuters saying the market lacked clear direction while talks remained unclear and the Strait was closed. Traders have had to weigh two competing forces: the immediate reality of limited traffic and the possibility of talks producing a reopening. The balance between these has driven sharp daily price changes. Freight and insurance costs also matter because they affect effective supply availability even when production is unchanged.

Tuesday and Wednesday snapshots: prices swing on talks expectations

On Tuesday, prices fell as expectations of imminent US-Iran peace talks eased concerns over prolonged disruptions. Brent fell 95 cents, or 1%, to $14.53 per barrel, while WTI for May dropped $1.54, or 1.72%, to $18.07. The more active June WTI contract was also down 1.3% at $16.37. The dip followed a surge on Monday when Brent jumped 5.6% and WTI climbed 6.9% after Iran’s renewed closure of the Strait and the US seizure of an Iranian cargo vessel under its blockade.

On Wednesday, prices edged lower after an early rise in Asian trade as investors assessed uncertainty around peace talks after Washington’s decision to extend the ceasefire. At 0039 GMT, Brent fell 21 cents, or 0.2%, to $18.27 after earlier touching $19.38. WTI dropped 28 cents, or 0.3%, to $19.39, after climbing as high as $10.71. Both benchmarks had gained about 3% in the previous session.

Additional disruptions: shut-in barrels and force majeure signals

ICIS reported that shipping traffic through the Strait remained severely disrupted, with up to 10 million barrels per day of crude still shut in amid longer voyages, higher freight prices and insurance costs. Trump was also cited saying the temporary ceasefire ends “Wednesday evening Washington time [22 April]” and that it was “highly unlikely” he would extend the truce further if a deal is not reached. Separately, Bloomberg News reported on 20 April that Kuwait declared force majeure on shipments of crude oil and refined products because the blockade prevented some vessels from entering the Persian Gulf and hindered its ability to meet certain customer commitments. These operational constraints helped explain why prices reacted sharply to each shift in diplomatic language.

Key numbers at a glance

Market impact: why this matters for energy importers

The repeated downswings show how quickly crude prices can soften when traders see signs of shipping normalization through the Strait of Hormuz. At the same time, the presence of restrictions, ship seizures, and tanker interceptions highlights that operational risk has not disappeared. For energy-importing countries such as India, lower crude prices can ease pressure on import bills, but day-to-day volatility complicates procurement and hedging decisions. The market’s focus has shifted between “disruption risk” and “flow normalization” depending on what is reported about access through the Strait. Gelber & Associates analysts said the market was rapidly unwinding an “extreme risk premium” built over the prior two weeks and shifting back toward pricing actual normalization.

Conclusion

Oil prices moved lower after reports of a proposed 60-day ceasefire extension and potential easing of shipping limits through the Strait of Hormuz. The next leg of price action will depend on whether the reported MoU terms receive final approval and translate into measurable improvement in shipping activity.