2026.05.07

Oil Tumbles as US-Iran Peace Deal Hopes Raise Hormuz Reopening Expectations

Oil prices plunged to two-week lows as reports suggested the U.S. and Iran were nearing an initial peace agreement, boosting hopes that the Strait of Hormuz could gradually reopen. Brent fell 7.8% to $101.27/bbl after briefly dropping below $100, while WTI declined 7.0% to $95.08/bbl. Pakistan-mediated talks reportedly moved closer to a draft agreement, with Iran reviewing a new U.S. proposal and expected to respond within 48 hours. Analysts said even the prospect of a deal is pressuring oil prices lower, although global crude flows may still take 6-8 weeks to normalize due to shipping disruptions and stranded vessels.

Trump Says Iran Agrees to Give Up Nuclear Weapons

President Donald Trump said Iran has agreed that it “cannot and will not” possess nuclear weapons, signaling growing optimism over ongoing U.S.-Iran negotiations. Reports said both sides are discussing a one-page memorandum covering a temporary halt to Iran’s uranium enrichment, phased easing of sanctions and a gradual reopening of the Strait of Hormuz. Trump also suggested Iran’s highly enriched uranium stockpile could be transferred to the U.S. and underground nuclear facilities shut down as part of a final deal. He indicated an agreement could potentially be reached within a week, ahead of his planned China visit on May 14-15, although Iran has yet to officially confirm the terms.

CMA CGM Ship Hit in Hormuz as Another Vessel Escapes Gulf

A CMA CGM container ship, San Antonio, was attacked while transiting the Strait of Hormuz, injuring eight crew members and damaging the vessel. The crew were evacuated for treatment, with reports indicating the ship was struck by an Iranian projectile near Oman. Meanwhile, another CMA CGM vessel, Saigon, successfully exited the Gulf and is heading toward Sri Lanka.

France, UK Maritime Coalition Ready to Escort Ships Through Hormuz

France said a maritime coalition led by France and the UK is prepared to escort commercial vessels through the Strait of Hormuz if Iran accepts a proposed U.S. peace deal. France has deployed the aircraft carrier Charles de Gaulle to the Red Sea as part of preparations to secure shipping routes. The proposal comes as the Iran war enters its 10th week, with the near closure of Hormuz disrupting millions of barrels of oil supply and pushing U.S. gasoline prices above $4.50/gal for the first time since 2022. Iran’s Revolutionary Guard said new protocols would ensure “safe, stable passage,” though shipping and insurance markets remain cautious about resuming normal transit.

Iran Launches New Authority to Charge Ships Transiting Hormuz

Iran has launched a new agency called the “Persian Gulf Strait Authority” (PGSA) to collect tolls from vessels transiting the Strait of Hormuz, formalizing fees that the shipping industry considers illegal. Reports suggest transit charges for large tankers could reach as high as $2 million per voyage, while the U.S. warned that any payments to Iran may violate sanctions. The move comes amid escalating tensions in Hormuz, where Iran continues targeting foreign vessels while U.S. naval forces escort selected ships through the waterway. Iran is also reportedly preparing legislation to ban Israel-linked ships and impose severe restrictions on vessels associated with the U.S. and allied countries.

Indonesia Allows Iranian VLCCs to Transit Lombok Strait Amid US Blockade

Indonesia said it will not block Iranian vessels from transiting the Lombok Strait, after two Iranian VLCCs — the Huge and Derya — reportedly passed through the route following a breakthrough of the U.S. blockade near Hormuz. The Huge was carrying about 1.9 million barrels of Iranian crude valued at roughly $220 million, while the Derya carried around 1.88 million barrels. Shipping analysts said the use of Lombok instead of the Strait of Malacca suggests Iran is adapting routes to avoid monitoring and sanctions pressure. Since the U.S. blockade began on April 13, more than 49 vessels have reportedly been redirected, sharply reducing Iranian tanker traffic through traditional Asia-bound routes.

OPEC Oil Output Hits 36-Year Low as Iran War Cuts Persian Gulf Supply

OPEC crude production fell by 420,000 bpd to 20.55 million bpd in April, the group’s lowest output level since 1990, according to a Bloomberg survey. The decline followed an even steeper 8.6 million bpd drop in March after the Iran war disrupted flows through the Strait of Hormuz. Kuwait saw the largest monthly decline, with production falling 470,000 bpd to 800,000 bpd, while Iran’s output dropped 180,000 bpd to 3.05 million bpd amid the ongoing U.S. blockade. Despite the severe supply disruption, OPEC+ still agreed to a symbolic June output increase, while oil prices swung sharply on hopes for a possible U.S.-Iran diplomatic deal.

US Fuel Exports Hit Record High as Iran War Tightens Global Supply

U.S. oil product exports surged to a record 8.2 million bpd last week as global buyers sought alternatives to disrupted Middle East supplies amid the Iran war. Distillate exports, including diesel, reached a record 1.9 million bpd, while jet fuel exports climbed to 427,000 bpd near all-time highs. Rising exports have tightened domestic inventories, with U.S. diesel stockpiles falling to their lowest level since 2005. Retail gasoline prices rose above $4.50/gal for the first time since July 2022, while diesel jumped to $5.67/gal and Gulf Coast jet fuel prices surged 57% since the war began.

Vitol Turns to Mexican Crude as Middle East War Disrupts Global Oil Trade

Vitol Group is purchasing Mexican crude for the first time in about a decade as the Middle East conflict continues to disrupt global oil flows and tighten supply chains. The tanker Eurovision loaded around 827,000 barrels of Olmeca crude and 200,000 barrels of Maya crude from Pemex on Wednesday, with the cargo likely headed to Europe where Vitol operates refineries. Pemex rarely sells directly to traders unless they own refining assets, making the deal notable.