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US Oil Update: Crude Drops on Iran Peace Deal Optimism, Trump Lifts Hormuz Blockade

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Crude futures retreated in midday trading on Friday after President Trump lifted the US naval blockade and outlined conditions for a tentative Iran peace deal that includes reopening the Strait of Hormuz, potentially easing concerns over a major disruption to global energy flows.

Front-month West Texas Intermediate crude futures fell 2.43% to $86.66 per barrel, while Brent futures shed 1.97% to $91.86/bbl.

US crude oil stockpiles fell by 3.3 million barrels to 441.7 mmbbls in the week ended May 22, the Energy Information Administration said in its weekly report on Thursday.

Strategic Petroleum Reserve inventories dropped to 365.1 mmbbls for the week ended May 22, down from 374.2 mmbbls a week ago, marking a weekly decline of 9.1 mmbbls, EIA data showed.

Crude inventories are now about 2% below the five-year average for this time of year, the EIA said.

"US refineries are now ramping up to supply enough gasoline and diesel for the summer season. They thus use more crude with less crude left for exports, which have now fallen to the lowest level in two months in response," said Bjarne Schieldrop, chief commodities analyst at SEB Research.

On Friday, Trump said he would meet in the White House Situation Room to make a final determination on an agreement with Iran.

"I will be meeting now, in the Situation Room, to make a final determination," Trump said in a social media post on Truth Social.

The US President said that Washington would lift the retaliatory US naval blockade in the Gulf of Oman, noting that vessels previously affected by the blockade could now return home.

"Ships caught in the Hormuz Strait due to our amazing and unprecedented Naval Blockade, which will now be lifted, may start the process of 'heading home!'," he said.

ING strategists said the oil market is continuing to edge lower amid growing optimism that the US and Iran are moving toward a deal, noting that the reopening of the Strait would offer immediate relief to global energy markets.

Meanwhile, Iran's Speaker of Parliament Mohammad Bagher Ghalibaf said in a social media post that Tehran seizes concessions not through dialogue but with missiles, adding, "in negotiations, we merely make them understand".

"We have no trust in guarantees or words - only actions are the measure," Ghalibaf said in a social media post X. "No action will be taken before the other side acts."

Saxo Bank strategists said that though significant hurdles remain, the market is reacting to the prospect of a supply surge once hundreds of tankers loaded with crude oil and refined fuels are released from the Persian Gulf.

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