Oil prices fell sharply on news that the United States and Iran have tentatively agreed to extend a ceasefire by 60 days, raising hopes that flows through the Strait of Hormuz may resume. According to a person familiar with the matter, Brent crude dropped toward $92 a barrel, down 19% this month, while West Texas Intermediate fell below $88. However, President Donald Trump has yet to approve the terms, and multiple hurdles stand in the way of a full resumption of oil flows.

The 19% Monthly Plunge That Bet on a Deal

Brent crude is on track for its biggest monthly drop since 2020, reflecting growing market speculation that some form of accord between Washington and Tehran is imminent. The decline in May came as traders priced in the possibility that the Strait of Hormuz—a chokepoint for about a fifth of the world's oil—might reopen after months of effective closure.. As the report noted, the conflict has triggered a global energy shock, with millions of barrels of daily oil supply shut off.

Still, the market's optimism may be premature. The tentative ceasefire extension is not yet finalized, and as Vice President JD Vance told reporters, it is too early to know when or if a deal with Iran would be raeched. Treasury Secretary Scott Bessent said only that the teams have been "going back and forth" when pressed on whether an interim agreement had been clinched.

Trump's Undecided Pen: Why the Ceasefire Is Still Tentative

President Trump has not yet agreed to the terms of the 60-day extension, according to a person familiar with the matter, after Axios reported that shipping through the strait would be unrestricted . This leaves the entire arrangement in limbo. Earlier, Bessent outlined Trump's red lines for any pact: the waterway reopening and Iran turning over highly enriched uranium.

The source also noted that it remains unclear how sticking points including the Islamic Republic's nuclear program, Iran retaining control over Hormuz, and sanctions relief will be addressed. The history of such negotiations, as Aaron Stein of the Foreign Policy Research Institute pointed out, has been one of "slowly and excruciatingly pulling toward what is being framed as a deal." He cautioned that if it is merely an extension of the ceasefire, then nothing fundamentally changes.

The Three Hurdles Before a Single Barrel Moves: Mines, Fields, and Missile Damage

Even if a truce extension is formally agreed, the physical obstacles to resuming oil flows are daunting. According to the report, mines in the Hormuz waterway must be removed, shut-in fields may take months to restart, and damage to energy infrastructure from drone and missile strikes needs to be repaired. Ryan McKay, senior commodity strategist at TD Securities, warned: "I would expect flows to remain heavily constrained due to the time lag of tanker travel and time to get production back online. We can end up losing another 1 billion barrels of supply during a recovery period."

Vessels would take weeks to reach importing nations, meaning any relief at the pump is still distant. The report also highlighted growing tightness in the U.S. during the crsis: distillate stockpiles sank to the lowest in more than two decades, and crude holdings at the Cushing, Oklahoma hub fell to 23 million barrels, pushing closer to the minimum operating level of 20 million barrels.

What a 'Lift-for-Lift' on Blockades Would Actually Look Like

Stein noted that there appears to be at least consensus on the need for a "lift-for-lift" on the two blockades—meaning both sides would ease restrictions simultaneously. But what that entails in practice is still unclear. Would the U.S. lift sanctions in phases? Would Iran fully relinquish control over Hormuz? The source did not provide details on the sequencing or verification mechanisms, leaving a critical gap in the narrative.

The open question remains: can both sides overcome the trust deficit that has scuttled previous rounds of talks? Until the details of the lift-for-lift are spelled out, the market may be overestimating the likelihood of a swift return to normalcy .