Oil Prices Plunge 7% as US and Iran Reportedly Near Peace Agreement
NEW YORK - Global oil prices plunged sharply at the close of trading on Wednesday (6 May 2026) local time, or Thursday (7 May 2026) morning WIB, amid optimism that the war in the Middle East could ease. The decline occurred alongside reports that the United States (US) and Iran are increasingly close to reaching an initial peace agreement. Citing Reuters, Brent crude oil prices fell by $8.60, or 7.83 per cent, to $101.27 per barrel. Brent prices even dipped below the $100 per barrel level for the first time since 22 April 2026. Meanwhile, US West Texas Intermediate (WTI) crude oil prices dropped $7.19, or 7.03 per cent, to $95.08 per barrel. A source from Pakistan, which is mediating the negotiations, stated that the US and Iran are now approaching an agreement in the form of a one-page memorandum of understanding. Previously, Iran had emphasised that it would only accept a fair and comprehensive agreement. US media outlet Axios also reported that Washington expects Iran to respond to several key points within the next 48 hours. Axios sources described this situation as the closest the two countries have come to an agreement since the war broke out. Senior analyst at Price Futures Group, Phil Flynn, said the market is beginning to see a greater chance of the Strait of Hormuz reopening. “There is growing confidence that the chances of the Strait of Hormuz reopening are increasing, regardless of whether a permanent peace agreement with Iran is ultimately reached or not,” he said. A senior member of the Iranian parliament also described the US proposal as more like a “wish list” than reality. The US military had previously stated that it had destroyed several small Iranian vessels as part of efforts to help trapped ships exit the Strait of Hormuz. “An announcement of an agreement would immediately push futures contracts even lower. Even the potential for an agreement has already triggered the oil price drop,” said Head of Oil Analysis at Rystad Energy, Paola Rodriguez-Masiu.