Full Breakdown
Oil Prices Plunge in May Amid Hopes of Iran Deal, but Supply Risks Loom
5/29/2026, 11:49:39 PM
May’s Oil Price Collapse: Scale and Immediate Effects
In May, Brent crude fell nearly 20%, the biggest monthly drop in six years, while U.S. crude slid about 17%, the largest decline since April 2025. Both remain over 50% above January levels. The fall eased U.S. gasoline prices modestly, with the average unleaded pump price slipping 17 cents to $4.39 per gallon, still 47% above pre-war rates.
Political Signals and Market Reaction
Price declines coincided with President Donald Trump’s claims that a peace deal with Iran was imminent. On Truth Social he wrote he was about to make a “final determination” on the agreement, prompting further price drops. Two U.S. officials said Trump is reviewing a draft but has not signed it. Analysts note the messaging has boosted optimism.
Supply Constraints and Inventory Risks
About 20% of energy passes the Strait of Hormuz, yet traffic has been nearly halted since the war. Chevron CEO Mike Wirth rejected Iran’s toll proposal, while Exxon Mobil’s Neil Chapman warned inventories of crude, gasoline, diesel and jet fuel have “run down,” nearing “unheard-of” levels, raising sharp price surge risk.
Data Snapshot
Official Statements & Responses
The White House says talks with Iran are moving toward a cease-fire. U.S. officials say the president is reviewing a draft agreement but has not signed it. Chevron and Exxon Mobil executives warned markets are tightening as inventories fall.
Criticism & Opposition
ING market strategist Francesco Pesole warned markets may be “getting ahead of itself,” asking whether the Strait of Hormuz will reopen soon or remain in a stalemate. Analysts note a cease-fire would need months to clear mines and restore traffic.
Conflicting Reports & Gaps
Trump’s posts suggest an imminent deal, yet officials say only a draft is under review. No data confirm when Hormuz traffic will resume or inventory levels, leaving forecasts uncertain.
Verbatim Quotes
- “final determination” — Donald Trump, Truth Social post
- “The question now is whether the Strait of Hormuz will reopen soon or the extended ceasefire will only lead to another prolonged stalemate,” — Francesco Pesole, ING market strategist
- “Commercial inventories of crude oil, of liquids-linked petroleum, gasoline, diesel, jet fuel, they’ve all run down,” — Neil Chapman, Senior Vice President, Exxon Mobil
- “We are steadily drawing inventories down on products, on crude in locations around the world,” — Mike Wirth, CEO, Chevron
Outlook: June-July Critical Window
Exxon Mobil and Chevron say June-July are pivotal. Chapman warned a $150-per-barrel spike could push California gasoline to $9 per gallon. Wirth cautioned that a prolonged Hormuz constraint could drive “how high is high?” Observers are watching diplomatic and shipping developments.
