West Texas Intermediate crude oil closed at roughly $90.31 per barrel on May 25, slipping below the $90 mark for the first time since May 7. The drop, more than 6% from the prior day’s close, represents the sharpest single-session decline in weeks.
What drove oil off a cliff
The culprit is diplomacy. Tensions between the US and Iran, particularly around the Strait of Hormuz, the narrow chokepoint through which roughly a fifth of the world’s oil supply passes, have been cooling. Signals of potential ceasefires and diplomatic progress have pulled the rug out from under the geopolitical risk premium that had been propping up crude prices for months.
WTI surged to near $119 per barrel in March 2026, driven by Strait of Hormuz disruptions. From $119 to $90 is a decline of roughly 24%.
The Energy Information Administration (EIA) forecasts Brent averaging $89 per barrel in Q4 2026 and dropping further to $79 in 2027, driven by rising Middle East production.
