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May 25 (UPI) — With the United States and Iran reportedly nearing a peace deal, oil prices fell slightly below $100 per barrel early Monday, suggesting optimism from traders to start the week.

Gas prices also declined slightly in the United States in the last week, but remain above $4.50 per gallon for regular on Memorial Day.

President Donald Trump has indicated that negotiations are “proceeding nicely,” and Iran acknowledged that talks have progressed but that a deal has not been reached, The BBC reported.

In European trading, Brent crude dropped to $95.04 per barrel and WTI futures dropped dropped to $91.02 per barrel — both declines of more than 5% — the Wall Street Journal reported.

Even with gas prices high, The Hill reported that more than 39 million people were projected to travel the roads during Memorial Day weekend, even as gas prices have remained consistently high since the start of the war in Iran.

Regular gas on Monday averaged $4.50 per gallon, which is down $0.01 from one week ago, but still $0.40 higher than one month ago, AAA reported.

Similar, diesel averaged $5.59 per gallon on Monday, which is down $0.03 from one week ago, and $0.40 more than one month ago.

“Memorial Day travel is still reaching record levels, but with the smallest year-over-year increase in more than a decade,” said Tiffany Wright, spokesperson for AAA’s The Auto Club.

“Although travel demand remains strong, higher fuel prices and persistent inflation may cause some travelers to shorten trips, delay plans or stay closer to home.”

The longer that the United States and Iran take to agree on a peace plan and the Strait of Hormuz remains closed, gas prices are unlikely to decrease significantly and energy markets will take a while to get back to normal, Axios reported.

“Gas prices are currently falling, but until we see an agreement signed and a significant amount of ships transit the Strait, the national average prices of gasoline will likely remain well above $4.00 per gallon,” said Patrick De Haan, head of petroleum analysis for Gas Buddy.

Published on 30/04/2026 – 10:17 GMT+2•Updated
10:28

Brent crude, the international standard for oil prices, jumped by over 7% during early trading on Thursday, touching $126 per barrel, the highest intraday level since 2022 when Russia initiated the full-scale invasion of Ukraine.

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The US benchmark crude, WTI, also rose more than 3% and hit over $110 per barrel.

At the time of writing, prices have corrected slightly with the front month contract for Brent trading at around $122 per barrel and WTI at roughly $108.5.

Prices are now the highest they have been since the start of the Iran war.

The surge in oil prices is a direct consequence of stalled negotiations over the reopening of the Strait of Hormuz, the absence of a clear path toward ending the war and a seemingly increased chance of US-Israeli military action returning.

US President Donald Trump is set to meet with the head of the US Central Command, Admiral Brad Cooper, on Thursday and receive a briefing on new military options for action in Iran, according to Axios which cites two unnamed people.

The meeting signals the potential for fresh escalation in the Middle East as the resumption of combat operations is reportedly “seriously under consideration” and oil markets have reacted swiftly to the news.

A ceasefire has held since early April but recent negotiating efforts have fallen flat with the two sides refusing to meet. Meanwhile, the US and Iran both maintain their blockade of the vital Strait of Hormuz.

US Central Command has also reportedly asked for hypersonic missiles to be sent to the Middle East, which would mark the first time the US army has deployed that type of weapon.

The persistent blockade of ports and the threat of expanded combat have fundamentally reshaped market expectations.

A shifting landscape for OPEC and global supply

The spike in prices is occurring against a backdrop of significant structural change within the global oil hierarchy.

Earlier this week, the United Arab Emirates officially withdrew from the Organisation of the Petroleum Exporting Countries (OPEC) and its wider alliance (OPEC+), a move the nation claimed was necessary to prioritise its own national interests.

Under normal market conditions, the exit of a major producer from the cartel might be expected to signal a potential increase in supply or a decrease in price stability.

However, the sheer scale of the Iran war has rendered the UAE’s departure secondary in the minds of traders.

Despite the UAE’s exit, which was expected to potentially weaken OPEC’s grip on production quotas, prices have continued their upward trajectory.

This suggests that the “war premium” currently dominates all other market fundamentals.

Investors are currently less concerned with the internal politics of oil-producing nations and more focused on the immediate physical absence of Iranian crude, suspended shipping routes through the Strait of Hormuz and the threat to regional infrastructure.

However, the transition of the UAE to an independent actor still highlights a growing fragmentation in global energy governance at a time when the world’s energy security is at its most vulnerable.

Jump in prices comes as Donald Trump says vessels will need permission of US Navy to transit key waterway.

Oil prices have jumped on heightened tensions between the United States and Iran in the Strait of Hormuz following Washington and Tehran’s tit-for-tat captures of commercial vessels.

Brent crude, the international benchmark, topped $106 per barrel early on Friday morning as Washington and Tehran stepped up their confrontation over the key maritime route for transporting the world’s energy.

Brent stood at $106.80 as of 01:00 GMT, up nearly 5 percent from its closing price on Wednesday, when it surpassed $100 per barrel for the first time in two weeks.

US stocks fell overnight, with the benchmark S&P 500 index dipping 0.41 percent and the tech-heavy Nasdaq Composite dropping 0.89 percent.

Shipping in the Strait of Hormuz, which normally carries about one-fifth of the world’s supply of oil and natural gas, remains at a standstill as Iran continues to demand the right to decide which vessels may pass and the US blocks Iran’s maritime trade.

US President Donald Trump said in a Truth Social post on Thursday that he had ordered the US Navy to destroy any Iranian boats laying mines in the strait, shortly after the Pentagon announced that it had seized a tanker carrying sanctioned Iranian oil for the second time in less than a week.

Trump also appeared to expand the scope of the US naval blockade beyond Iranian ports, writing on Truth Social that no ship “can enter or leave” the strait without the approval of the US Navy.

“It is ‘Sealed up Tight,’ until such time as Iran is able to make a DEAL!!!” Trump said.

Trump’s threats came a day after Iran’s Islamic Revolutionary Guard Corps announced the capture of two foreign cargo ships in the waterway.

The IRGC said it had seized the Panamanian-flagged MSC Francesca and Greek-owned Epaminondas after the vessels had endangered maritime security “by operating without the necessary permits and tampering with navigation systems”.

The Greek Maritime Affairs and Insular Policy Ministry has denied that the Epaminondas was captured and said the vessel remains under the control of its captain.

Only nine commercial vessels transited the strait on Wednesday, compared with seven on Tuesday and 15 on Monday, according to maritime intelligence platform Windward.

Before the US and Israel launched their war against Iran on February 28, the waterway saw an average of 129 transits each day, according to United Nations Trade and Development.