Oil Heads for Its Largest Monthly Drop Since 2020 as a US-Iran Truce Nears

Brent crude, the global oil benchmark, traded near $92 a barrel at the end of May and is on track for a decline of roughly 17 percent over the month, the steepest monthly fall since 2020 according to CNBC. The move reverses much of the increase that followed weeks of fighting between the United States, Israel, and Iran.

The cause is diplomacy. Reporting by Axios describes a framework for a 60-day ceasefire extension under which the Strait of Hormuz would reopen, Iran could sell its oil freely, and the two sides would negotiate limits on Tehran's nuclear program. About one-fifth of the world's seaborne oil and liquefied natural gas passes through the strait, so traders treat any reopening as a direct reduction in supply risk.

The agreement is not signed. US media report that Trump has tightened his terms, and that Tehran may take days to respond. President Donald Trump said Iran has agreed to forgo nuclear weapons and claimed its enriched uranium would be removed from the ground and destroyed under international monitoring. Iran's chief negotiator countered that there would be no deal until Iranian rights are secured, and Iranian state media said nothing is final.

The pressure campaign continues at the same time. US Central Command said it struck the Gambia-flagged cargo ship Lian Star overnight after the vessel ignored more than 20 warnings while attempting to enter an Iranian port. The blockade remains in force while the talks proceed.

Cheaper oil eased one source of inflation, but prices for hard assets stayed high. Gold traded near $4,535 an ounce and silver near $76, while the US dollar index was near 99. Lower energy prices reduce headline inflation, but they do not reverse the underlying expansion of central-bank credit that has kept demand for metals strong.