Crude oil prices dropped significantly following weekend remarks from President Trump regarding a potential diplomatic breakthrough between Washington and Tehran. These comments suggested that a deal could soon reopen the Strait of Hormuz and restart peace negotiations.

A 4.6% retreat from $103 per barrel

The international crude benchmark saw a 4.6% decline, landing at $98.8 per barrel after Friday's close exceeded $103, as reported by the source. This downward movement began at the start of futures trading on Sunday,reacting to the possibility of stabilized energy corridors in the Middle East.

The volatility reflects the market's sensitivity to the geopolitical status of the Strait of Hormuz. while prices had been trading at higher levels late last week, the sudden shift suggests that traders are pricing in the potential for increased supply and reduced regional tension.

Esmail Baghaei’s "final stage" memorandum

According to the report, the framework for this potential agreement is currently "subject to finalization" involving the US,Iran, and several other nations. Iranian foreign ministry spokesman Esmail Baghaei stated on Saturday that Washington and Tehran are currently in the "final stage" of drafting a memorandum of understanding.

The internal approval process in Iran remains a critical hurdle for the deal's success. A senior Iranian source told Reuters that if the Supreme National Security Council approves the memorandum, it must then be sent to Supreme Leader Ayatollah Mojtaba Khamenei for final approval.

The US blockade of the Strait of Hormuz

Despite the optimism surrounding the memorandum, President Trump clarified that the American blockade of the Strait of Hormuz will persist until a formal, concrete agreement is signed. This condition ensures that the US maintains its leverage throughout the final drafting stages.

The reopening of this vital maritime passage is a central component of the proposed peace talks.. Until a signed document is produced, the physical blockade remains a primary factor influencing both regional security and global energy logistics.

Will Tehran accept the US stance on sanctions?

While the momentum for a memorandum of understanding is growing, several critical variables remain unverified. It is currently unclear if the US will actually relent on its demands regarding Iranian crude oil sales, a key sticking point for Tehran. The state-managed Iranian news agency Tasnim reported on Sunday that the proposed deal could collapse because the US is refusing to ease sanctions on Iranian crude oil sales.

Furthermore, reports indicate that critical issues like Tehran’s nuclear program and its stores of enriched, near-weapons grade uranium have been deferred to future negotiations. This leaves the long-term stability of the agreement in question, as the most contentious elements of the conflict have not yet been resolved.