Oil falls below $100 a barrel on Middle East peace hopes

LONDON - Oil prices extended losses on Thursday, sliding by more than 2% to take the Brent crude benchmark below $100 a barrel on renewed hopes for a U.S.-Iran peace deal that could bring a gradual reopening of the Strait of Hormuz.

Brent crude futures fell $2.50, or 2.5%, to $98.77 a barrel by 1107 GMT. U.S. West Texas Intermediate dropped $2.47, or 2.6%, to $92.61.

Thursday's session was volatile, with Brent trading in a range of up 1% to down 3.8% from the previous close.

Both benchmarks slumped more than 7% on Wednesday, hitting two-week lows on optimism over a possible end to the Middle East conflict.

Price drops continued into Thursday as investors reacted to fresh headlines of progress towards potential peace talks.

Analysts flagged a report from Saudi Arabia's Al Arabiya news channel that said understandings have been reached to ease the U.S. blockade in exchange for a gradual reopening of the Strait of Hormuz, and another by Israel's Channel 12 that said Iran had agreed to transfer its stockpile of 60% enriched uranium to a third country. Reuters could not immediately verify the contents of either report.

"From a broader perspective, oil markets have remained stuck between diplomacy and disruption for more than two months, with investors' emotions being manipulated by headlines almost daily," said Priyanka Sachdeva, senior market analyst at Phillip Nova.

"If a formal deal eventually materialises, oil prices could witness a free fall as geopolitical premiums rapidly evaporate from the market. However, any fresh signs of attacks on oil infrastructure or escalation in the Middle East could easily trigger another parabolic spike in crude prices."

Iran had said on Wednesday that it was reviewing a U.S. peace proposal that sources said would formally end the war while leaving unresolved the key U.S. demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz.

Earlier in the week, U.S. Treasury Secretary Scott Bessent urged China to intensify its diplomatic efforts to persuade Iran to open the Strait of Hormuz to international shipping, adding that President Donald Trump and Chinese counterpart Xi Jinping will discuss the subject when they meet next week.

"While peace negotiations are likely to continue at least until next week's U.S.-China summit, the outlook beyond that remains uncertain," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment.

(Reporting by Robert Harvey in London, Yuka Obayashi in Tokyo and Emily Chow in SingaporeEditing by David Goodman and Susan Fenton)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published May 7, 2026 at 4:21 AM.