Oil Prices Slide as U.S.-Iran Ceasefire Hopes Ease Global Supply Concerns

By Benadeta Mwaura - Reporter

U.S , May 29, 2026 - Global oil prices are heading for their sharpest weekly decline in recent weeks after reports emerged that the United States and Iran are moving closer to extending a ceasefire agreement that could ease tensions around the critical Strait of Hormuz shipping route.

Brent crude fell to around $92 per barrel on Friday, while U.S. West Texas Intermediate (WTI) crude dropped below $88, with both benchmarks recording weekly losses of more than nine percent as traders reacted to growing optimism over a potential de-escalation of the Middle East conflict.

The sharp decline follows reports that Washington and Tehran had reached a tentative understanding to extend a 60-day ceasefire and potentially reopen shipping through the Strait of Hormuz, one of the world’s most important oil transit corridors.

The Strait of Hormuz handles nearly a fifth of global oil supplies, making any disruption in the waterway immediately felt across international energy markets. Earlier this year, fears of prolonged closure and military escalation sent oil prices soaring above $100 per barrel and triggered global inflation concerns.

At the peak of the crisis, analysts and international agencies warned that the disruptions represented one of the most serious energy security threats in modern history.

The International Energy Agency previously described the situation as “the greatest global energy security challenge in history” after shipping through the Gulf region slowed significantly during the conflict.

Investors are now rapidly unwinding the geopolitical risk premium that had been built into oil prices over recent months.

Markets reacted positively to signs that oil could begin flowing more normally through the Gulf if a final agreement is reached between Washington and Tehran.

“Even though it's not done, there seems to be some hope that we will start to get some oil moving through the Strait of Hormuz,” analyst Phil Flynn of Price Futures Group said.

The easing oil prices also weakened the U.S. dollar, which had strengthened earlier during the conflict as investors rushed toward safe-haven assets. Reuters reported that the dollar is now heading for a weekly loss as investors shift back toward riskier assets following the ceasefire reports.

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Global stock markets, meanwhile, rallied strongly on expectations that lower oil prices could ease inflationary pressure and reduce fears of another global economic slowdown.

For Kenya and many African economies heavily dependent on imported fuel, the decline in oil prices could offer temporary relief after months of fuel-related inflation pressure.

Rising global crude prices earlier this year pushed pump prices sharply higher across East Africa, increasing transport costs, electricity generation expenses, and food prices.

Kenya has already been battling rising inflation linked partly to fuel costs, with the latest official data showing inflation climbing to 6.7% in May as transport and household expenses surged. Rising oil prices had become one of the biggest drivers of the country's cost-of-living crisis.

However, analysts caution that the situation remains fragile.

While markets are optimistic, there is still no final comprehensive peace agreement between the U.S. and Iran, and previous ceasefire efforts have collapsed before implementation.

Despite ongoing negotiations, the United States has simultaneously imposed fresh sanctions targeting Iran’s military-linked oil trade, highlighting how quickly tensions could flare up again.

Energy experts warn that even if a deal is reached, restoring full oil flows and shipping stability through the Gulf could take months due to damaged infrastructure, insurance risks, and lingering security concerns.

For now, however, global markets are responding to one powerful possibility: That the world may be stepping back from an energy crisis that only weeks ago threatened to spiral into a full-scale global economic shock.