Oil prices are experiencing their largest monthly decline in six years, with Brent crude set for a drop of more than 20% in May and U.S. crude oil down 19%, marking the steepest monthly fall since late 2021 [1]. On Friday, Brent crude fell over 2% to $91.61 per barrel, while U.S. West Texas Intermediate (WTI) dropped more than 2% to $86.73 per barrel by 11:16 a.m. ET [2]. This sharp decline is providing relief to consumers, as the average price of unleaded gasoline in the U.S. has fallen 17 cents per gallon from this year's peak of $4.56, now averaging $4.39 per gallon, though this remains 47% higher than before the war began [1].
The primary catalyst for the price drop has been messaging from the White House, where President Donald Trump and administration officials have repeatedly suggested that the U.S. and Iran are nearing a deal to end hostilities and restore energy shipping to pre-war levels [1][2]. Trump stated on social media that he was meeting in the White House Situation Room to make a 'final determination' on an agreement with Iran, which prompted further declines in oil prices [2]. Trump has also outlined several demands for Iran, including a commitment never to develop nuclear weapons, immediate reopening of the Strait of Hormuz to unrestricted traffic, removal of remaining mines, and allowing the U.S. to destroy enriched uranium buried after previous attacks [2].
U.S. officials told both NBC News and CNBC that negotiators have drafted a 60-day memorandum of understanding (MOU) to extend the ceasefire and initiate talks on Iran's nuclear program, but Trump has not yet signed off on the agreement [1][2]. Market analysts cited by CNBC warn that an extended U.S.-Iran ceasefire could further depress energy prices by alleviating supply concerns, with technical support levels for WTI at $86 and Brent at $91, and the potential for additional declines if diplomatic progress continues [2].
The drop in oil prices has also influenced consumer behavior, with retailers like Costco reporting 'record-breaking volumes' for gasoline sales in the five weeks leading up to May 10, as high prices drove U.S. drivers to seek out discount fuel [1]. U.S. stocks are surging this year, buoyed by optimism around AI tech giants, corporate earnings, and the administration's signals that the war may soon end [1].
CONCLUSION
Oil prices have fallen sharply in May, driven by optimism over potential U.S.-Iran diplomatic progress and the prospect of an extended ceasefire. While consumers are seeing some relief at the pump, analysts caution that further diplomatic breakthroughs could continue to weigh on energy markets. The situation remains fluid as President Trump has yet to finalize any agreement.