Oil prices settle higher on slow progress in US-Iran peace talks

Published Sat, May 23, 2026 · 09:45 AM

[HOUSTON] Oil prices climbed on Friday (May 22), as investors worried that the US and Iran would be unable to reach a peace agreement that would allow shipping traffic to return to normal in the Strait of Hormuz.

Brent crude futures settled at US$103.54 a barrel, up 96 cents, or 0.94 per cent. US West Texas Intermediate (WTI) futures finished at US$96.60 a barrel, up 25 cents or 0.26 per cent. Both had risen over 3 per cent earlier in the session.

On a weekly basis, Brent was 5.48 per cent lower and WTI was down by 8.37 per cent, with prices volatile as expectations for a peace deal between Iran and the US shifted.

“We have so many headlines back and forth, it’s hard to keep up,” said Phil Flynn, senior analyst with Price Futures Group. “The story now is Iran will deliver the uranium for the lifting of sanctions. But they keep changing the news before the ink is dry on the newspaper.”

A diplomatic source in Islamabad told Iran’s state news agency IRNA that Pakistan’s army chief had left for Iran. A senior Iranian source told Reuters earlier that gaps with the US have narrowed, and US Secretary of State Marco Rubio spoke of “some good signs” in talks.

“There’s been some progress. I wouldn’t exaggerate it. I wouldn’t diminish it,” Rubio told reporters after a Nato ministers’ meeting in Sweden. “There’s more work to be done,” he added. “We’re not there yet. I hope we get there.”

Rubio said the US was in constant communication with the Pakistanis who are facilitating the talks with Iran.

The countries remained divided on Teheran’s uranium stockpile and controls on the Strait of Hormuz.

“I think we’re very much subject to the headlines,” said John Kilduff, partner with Again Capital. “We seem headed for a resolution, but the level of clarity is spectacular.”

Rubio also said the US had not requested the assistance of Nato allies in reopening the strait.

Global oil inventories have been depleting at an alarming pace as oil flows via the Strait of Hormuz slow to a trickle, said PVM Oil Associates analyst Tamas Varga.

“The optimism of a relatively imminent truce and bearish rhetoric whenever Brent approaches US$110 prevents oil prices from rallying significantly higher,” he said.

Separately, a Qatari negotiating team arrived in Teheran on Friday in coordination with the US to help secure a deal, a source with knowledge of the matter told Reuters on Friday.

Six weeks into the fragile ceasefire in the US-Israeli war with Iran, elevated oil prices have investors worried about inflation and the outlook for the global economy.

BMI, a unit of Fitch Solutions, has raised its average 2026 dated Brent price forecast to US$90 from US$81.50 to reflect the supply deficit, time required to repair damaged Gulf energy infrastructure, and a six- to eight-week post-conflict normalization window.

Around 20 per cent of global energy supplies transited the strait before the war, which has removed 14 million barrels per day of oil – or 14 per cent of global supply – from the market, including exports from Saudi Arabia, Iraq, the UAE and Kuwait.

Full oil flows through the strait will not return before the first or second quarter of 2027, even if the conflict ends now, the head of UAE state oil firm Adnoc said.

Seven leading Opec+ oil-producing countries will likely agree to a modest hike to July output when they meet on Jun 7, four sources said, though delivery for several remains disrupted by the war. REUTERS