# Oil Posts Its Worst Month Since 2020 as Traders Bet on a Ceasefire That Is Not Yet Signed

Brent crude fell about 19 percent in May as traders anticipated a United States-Iran truce, then rose more than 5 percent on June 1 after both sides exchanged fresh strikes.

- Published: 2026-06-01T11:12:53.582Z
- Canonical: https://polylog.news/2026-06-01/oil-posts-its-worst-month-since-2020-as-traders-bet-on-a-cea
- Publisher: Polylog (Global desk)
- Section: markets
- Sources: [Al Jazeera](https://www.aljazeera.com/news/2026/6/1/us-iran-trade-new-attacks-amid-talks-heres-what-we-know), [The Hindu](https://www.thehindu.com/news/international/iran-usa-war-peace-deal-donald-trump-israel-attacks-lebanon-hezbollah-june-1-2026/article71046810.ece), [Euronews](http://www.euronews.com/travel/2026/06/01/higher-airfares-and-fewer-visitors-how-the-iran-conflict-is-hitting-southeast-asia-tourism)

Crude oil fell sharply in May, a decline driven less by events in the region than by what traders expect to happen next. Brent crude, the global benchmark, dropped [about 19 percent over the month](https://www.cnbc.com/2026/05/29/oil-price-iran-deal-war-ceasefire-trump.html) and settled near $92.56 a barrel, with United States West Texas Intermediate around $88.90.

The decline rested on an expectation. The United States and Iran are reported to have mostly agreed on a 60-day memorandum that would pause hostilities and reopen shipping through the Strait of Hormuz, the channel that carries roughly a fifth of the world's seaborne oil. Yet the fighting has not stopped. Both governments [traded new attacks over the weekend](https://www.aljazeera.com/news/2026/6/1/us-iran-trade-new-attacks-amid-talks-heres-what-we-know), and President Donald Trump sent Tehran a [tougher peace proposal](https://www.thehindu.com/news/international/iran-usa-war-peace-deal-donald-trump-israel-attacks-lebanon-hezbollah-june-1-2026/article71046810.ece) even as Israeli operations widened in Lebanon. A ceasefire that took effect on April 8 has largely not held in practice.

The gap between the price and the situation on the ground narrowed at the start of June. After the United States struck command-and-control sites near the Strait of Hormuz and Kuwait reported incoming missiles and drones, [Brent rose more than 5 percent on June 1 to about $95.94 a barrel](https://www.thenationalnews.com/business/energy/2026/06/01/oil-prices-surge-as-us-and-iran-launch-fresh-strikes/), reversing part of May's decline. The episode showed how quickly a market pricing in a diplomatic outcome that no party has signed can move back toward the physical disruption that continues. Across Southeast Asia, airlines and tour operators report [higher fuel costs and thinner bookings](http://www.euronews.com/travel/2026/06/01/higher-airfares-and-fewer-visitors-how-the-iran-conflict-is-hitting-southeast-asia-tourism) tied to the conflict, a reminder that businesses still bear higher costs from the war regardless of where the market price settles on a given day.

## What this means

When a benchmark commodity moves on expected policy rather than realized supply, the price reflects a forecast as much as a fact. If the truce fails to hold, the optimism that lowered crude prices could reverse quickly, and businesses that have already absorbed higher fuel costs would have little room to absorb more.

## What to watch

- Whether Trump formally approves the 60-day memorandum and whether Iran's leadership confirms it.
- Tanker traffic and insurance rates through the Strait of Hormuz as a real-time measure of whether the disruption is easing.
- Any single strike on Gulf energy infrastructure that could reverse the month's price decline.