Oil prices collapse by 15%: US and Iran close to agreement to end conflict

World markets instantly reacted to the news of a possible end to the conflict, which has been keeping the entire Middle East and the global economy in suspense for several months.

Today, May 6, 2026, oil prices fell by almost 15%, while stock indexes in New York and Europe rose by 1-2,3%. The reason is a report by Axios^[1] that Washington and Tehran are close to signing a short memorandum of understanding that should end hostilities and pave the way for more detailed negotiations on the nuclear program. The information arrived in the morning and immediately spread through the world media, forcing traders to review positions in a matter of minutes.

How markets reacted during the first hours

US West Texas Intermediate (WTI) crude fell to $88 per barrel, while Brent crude fell to $96. Prices later recovered somewhat when Donald Trump told the New York Post^[3], that “it is too early to prepare for the signing ceremony.” As of 12:00 PM Eastern Time, WTI was already trading near $95, and Brent was near $103. At the same time, wholesale gasoline prices fell by 5%, and fuel oil, which is often used as an indicator of the cost of aviation fuel, was down by 6%.

US indices opened higher: the S&P 500 added 1,2%, the Nasdaq added 1,5%, the Russell 2000 added 1%, and the Dow Jones jumped almost 600 points. In Europe, the Stoxx 600 index ended the day 2,3% higher. Ten-year and thirty-year US bond yields fell to levels not seen since last week. This immediately affected mortgage rates: the average rate on a thirty-year fixed mortgage in the US fell to 6,44%, the lowest since Friday.

What exactly became known about the negotiations

According to Axios, US and Iranian officials are working on a short document that would end hostilities and create a framework for further negotiations on the nuclear deal. An Iranian Foreign Ministry spokesman told ISNA news agency^[4], that the US proposal is under consideration, and Tehran plans to convey its assessment to the mediator - Pakistan. The Iranian Navy published a message on the social network X this morning that "the aggressor's threats have been neutralized, and the new protocols guarantee safe passage through the Strait of Hormuz."

Donald Trump said in his post that the war would end and the strait would open “if Iran agrees to what has already been agreed, which is probably a big assumption.” He warned Tehran that if the conditions were not met, “the bombing will begin at a much higher level of intensity than before.” Meanwhile, Vice President J.D. Vance, special envoy Steve Witkoff, and the president’s son-in-law Jared Kushner held talks in Islamabad last month, but the parties then parted ways on nothing. The second round was canceled after Trump called the Iranian offer “not good enough.”

Why the Strait of Hormuz is in the spotlight

Since the conflict began, only a few ships have passed through the strait per day, instead of the usual hundreds. According to shipping tracking services^[6], on Tuesday only one ship crossed the strait, and on Monday four. Normally, more than 20% of the world's oil is transported through this route. The blockade has led to an increase in oil prices by more than 60% since the beginning of the year. Even after today's drop, the cost of a barrel remains 40% higher than when the fighting began.

Trump previously announced the end of Operation Project Freedom, which was supposed to escort commercial ships through the strait. According to US officials^[2], during two of the voyages, Iranian forces attacked the ships, but thanks to the presence of American military teams, the ships still reached their destinations. Thousands of other ships still remain in traffic jams.

Impact on American consumers

The average retail price of gasoline in the United States exceeded $4,50 per gallon for the first time since July 2022, reaching $4,54. This is only 48 cents below the all-time high of $5,02 set in June 2022. Since the start of the war with Iran, fuel prices for Americans have increased by more than 50%. If the current trend in the markets continues, experts expect a gradual decrease in prices at the gas stations in the coming weeks.

Lower bond yields are also easing credit conditions. Many Americans who have planned to buy a home or take out a car loan are closely watching developments. If rates continue to fall, this could provide an additional boost to consumer activity in the second half of the year.

Historical context and previous attempts at agreements

Negotiations between Washington and Tehran have been ongoing for several months. Previously, Trump has alternated between declaring “great progress” and doubting the success of the latest Iranian proposal. He has repeatedly mentioned internal disagreements in Tehran, which, in his opinion, are preventing an agreement from being reached. The Iranian side has denied these allegations. Such fluctuations in rhetoric have repeatedly caused sharp movements in the markets: some indices have fallen by more than 10% from record values, and then returned to above the levels recorded at the beginning of the war.

Experts point out that similar negotiations have repeatedly reached a deadlock. However, the current situation is different in that both sides seem to be feeling strong pressure: the United States due to rising energy prices and consumer dissatisfaction, Iran due to economic sanctions and military losses.

What's next: scenarios and expectations

Analysts believe that the coming days will be decisive. If Iran agrees to the terms of the memorandum, we can expect a gradual restoration of shipping through the Strait of Hormuz and a further decline in oil prices. In the event of a breakdown in negotiations, Trump has already promised to increase military pressure. Markets are likely to find themselves on a roller coaster again.

European countries, China and India, which are most dependent on oil from the Persian Gulf, are closely monitoring developments. Some of them have already started reviewing stocks and looking for alternative supply routes. At the same time, environmental organizations remind that any decline in oil prices could slow the transition to renewable energy sources.

Today has once again demonstrated how closely geopolitics, energy, and financial markets are connected. A single piece of news can rewrite analysts' forecasts and change the plans of millions of people around the world in a matter of hours. Whether the parties will be able to consolidate the progress achieved will be shown by the near future.

Sources

1. Axios
2. NBC News
3. New York Post
4. ISNA
5. Mortgage News Daily
6. Shipping tracking services