Oil Drops 20% From 2026 Peak as US-Iran Ceasefire MOU Takes Shape — But Hormuz Shipping Still Choked

Brent crude has fallen almost 19% for the month of May, according to CNBC, dropping to roughly $92.56 per barrel as of May 29, 2026. US West Texas Intermediate futures fell to around $87.18, off nearly 1.9% on Friday alone and down 16.5% month-to-date.

Energy prices have been sky-high since the war began on February 28. The Strait of Hormuz — the chokepoint between Iran and Oman that accounted for roughly 20% of global energy supply before the conflict — has been effectively shut to seaborne crude traffic. That blockage remains in place.

The MOU: Mostly Agreed, Not Actually Signed

Multiple news outlets are treating the ceasefire agreement as a done deal. It is not.

US negotiators and their Iranian counterparts have reached what CNBC, citing US sources, describes as a 60-day memorandum of understanding to extend the ceasefire and begin formal negotiations over Iran's nuclear program. Axios first reported the MOU. President Trump still has to approve it.

There's also a disinformation problem. Iran's state television claimed Wednesday that Tehran had agreed in a draft MOU to open the Strait of Hormuz to prewar commercial traffic levels, with Iran and Oman managing traffic jointly, according to Reuters. The White House called that a "complete fabrication." Trump himself said flatly that no nation will control shipping through the strait.

Bombs Were Still Falling During Negotiations

Even as diplomats were supposedly hammering out a ceasefire extension, Iran's Revolutionary Guard fired ballistic missiles toward Kuwait and launched attack drones toward the Strait of Hormuz on Thursday, according to CNBC. US Central Command said those missiles were successfully intercepted. Several Iranian drones were also reportedly downed.

The US, for its part, launched fresh strikes inside Iran against a military site believed to threaten US troops and commercial shipping, a US official told MS NOW.

Active military exchanges occurred simultaneously with active ceasefire negotiations.

The Shipping Numbers Are Brutal

UBS analysts, led by Henri Patricot, executive director in equity research for the oil and gas sector, reported there is still "little evidence" of any short-term improvement in vessel traffic or energy flows through the region.

According to UBS, Iranian crude loadings for May are running below 0.3 million barrels per day. In April, the average was 1.5 million barrels per day. In March, 1.7 million barrels per day. That represents a collapse of roughly 80% in two months.

What the Market Is Actually Pricing In

Oil markets sold off sharply on ceasefire optimism — Brent fell 58 cents to close at $93.71 on Thursday, per CNBC, even after initially spiking on news of the military exchanges.

Bob Parker, senior advisor at the International Capital Markets Association, told CNBC that oil will likely stay between $90 and $100 "at least for the next couple of months" regardless of the MOU, until there's real clarity on a lasting agreement. He warned of "inevitable" investor skepticism toward the negotiations — skepticism that appears justified given that strikes continued during the talks.

What Remains Unresolved

Most outlets are leading with the hopeful angle: ceasefire deal, oil drops, markets relieved.

But Trump hasn't signed anything. Secretary of State Marco Rubio said Wednesday that talks have made "some progress" and that Trump prefers diplomacy — but preference and signature are different things.

The Hormuz chokepoint remains functionally closed. A piece of paper doesn't move tankers through a contested strait where ballistic missiles were flying 48 hours ago.

Coverage is largely ignoring that Iran's state TV claimed a deal the White House explicitly denied. That signals Iran and the US may not be reading the same MOU.

Oil has had its worst month since the pandemic. A ceasefire extension framework exists on paper but hasn't been approved by the US president. Military strikes continued during negotiations. Actual shipping through the Strait of Hormuz remains near zero.