Oil prices show mixed reaction as White House backs report on progress toward Iran peace deal

By Myra P. Saefong and Isabel Wang

If signed, a memorandum of understanding would extend the U.S.-Iran cease-fire, Axios reported

President Donald Trump said Wednesday that he would not agree to a deal that allows Oman and Iran to control shipping through the Strait of Hormuz.

Global oil prices finished on a mixed note while U.S. crude prices edged higher Thursday, reacting to news of progress toward a deal that would extend the U.S.-Iran cease-fire.

Analysts, however, were skeptical that the developments would lead to a resolution to the conflict anytime soon.

The oil market had become skewed toward a "worst-case supply-disruption scenario, and traders are now unwinding some of that geopolitical premium," said Elliott Orsillo, co-founder and director of investments at Season Investments. Oil prices have traded lower on the week so far.

Axios reported Thursday that American and Iranian negotiators have a 60-day memorandum of understanding (MOU) in hand that would extend the cease-fire and lead to negotiations on Iran's nuclear program.

U.S. sources confirmed to MarketWatch the accuracy of the Axios report.

Iran has not confirmed acceptance of the MOU, which would still need President Donald Trump's approval, Axios noted, citing two U.S. officials and a regional source involved in the mediation efforts.

Orsillo said he would be careful about interpreting this news as "confidence in a durable peace agreement." Extending the cease-fire framework is "very different from resolving the underlying conflict, especially when enforcement appears weak and sporadic strikes continue to occur," he told MarketWatch. Still, the market may "simply be repricing from 'imminent regional escalation' back toward 'managed instability,'" he added.

Futures for Brent crude, the international oil benchmark, for July delivery (BRN00) (BRNN26) fell by 0.6% to settle at $93.71 a barrel Thursday. The most active Brent contract, for August delivery (BRNQ26), edged up by 0.5% to $92.70 a barrel.

West Texas Intermediate crude, the U.S. benchmark, saw its most active July contract (CL.1) (CLN26) add nearly 0.3% to $88.90 a barrel.

Speaking at the White House on Thursday afternoon, U.S. Treasury Secretary Scott Bessent said "nothing is going to be on the table until we see the Strait of Hormuz open and the Iranians agree that they have to turn over the highly enriched uranium and that they can't have a nuclear program."

If the MOU actually happens and if both sides were to sign it, the deal would "allow the most oil to flow since the conflict began," said Robert McNally, president at Rapidan Energy Group.

The developments come after the U.S. and Iran exchanged strikes overnight, fueling fresh concerns over shipping disruptions in the Strait of Hormuz.

The U.S. launched a fresh set of strikes targeting a military site in Bandar Abbas, which is located along the Strait of Hormuz in southern Iran, and shot at Iranian drones. That marked a second round of strikes on Iranian military sites in three days.

U.S. Central Command described the actions as "measured, purely defensive and intended to maintain the cease-fire."

Iran's Islamic Revolutionary Guard Corps said it had retaliated to the attacks by targeting a U.S. air base, but did not reveal any details about the base's location. The claim has not yet been verified by the U.S.

Against a changing backdrop, Season Investments' Orsillo said the geopolitical structure of the market still supports occasional price spikes, so he would not say that oil is done with prices above $100 a barrel. "Spare capacity globally is not enormous and shipping chokepoints remain vulnerable," he said.

Oil's reaction this week, however, "suggests the market currently believes the probability of a worst-case Middle East supply shock has declined materially," said Orsillo.

Robert Schroeder, Victor Reklaitis, and Nora Redmond contributed.

-Myra P. Saefong -Isabel Wang

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05-28-26 1540ET