Commodities May 6, 2026 06:41 PM

U.S. Oil Futures Recover as Markets Weigh Prospects of Middle East Peace Memorandum

West Texas Intermediate rebounds after prior-session drop tied to reports of a near-term deal between the United States and Iran

By Sofia Navarro

U.S. crude futures climbed roughly $1 in early Asian trading on May 7, reversing losses from the previous session as investors digested reports that negotiators were close to a one-page memorandum that could formally end the Middle East conflict. West Texas Intermediate gained 80 cents, or 0.8%, to $95.88 a barrel as of 2223 GMT after touching $96.33 earlier in the session. The contract had fallen about 7% the day before amid optimism over a potential peace agreement between the United States and Iran.

U.S. Oil Futures Recover as Markets Weigh Prospects of Middle East Peace Memorandum

Key Points

  • WTI crude futures rose 80 cents, or 0.8%, to $95.88 a barrel as of 2223 GMT, after earlier reaching $96.33.
  • The benchmark dropped about 7% on Wednesday amid optimism that the United States and Iran were nearing an initial peace agreement.
  • Reports from mediation sources indicated an agreement was close on a one-page memorandum that would formally end the conflict - developments affecting energy markets and broader financial markets.

TOKYO, May 7 - U.S. crude futures rose by about $1 in early trade on Thursday, recovering from the prior day's drop as market participants evaluated the likelihood of a Middle East peace agreement.

West Texas Intermediate (WTI) crude futures were up 80 cents, or 0.8%, trading at $95.88 a barrel as of 2223 GMT, after earlier climbing to $96.33 in the session.

Traders had pushed the benchmark contract down by roughly 7% on Wednesday amid growing optimism that the war in the Middle East could be brought to a close. Reports circulating in markets indicated that the United States and Iran were approaching an initial agreement.

Sources involved in mediation activities, including one linked to Pakistan and another individual familiar with the discussions, told reporters that negotiators were close to finalizing a one-page memorandum intended to formally end the conflict.

Iran publicly said it was reviewing a U.S. peace proposal. According to accounts of the proposal, the draft would formally end the war while not resolving certain central U.S. demands - specifically, that Iran suspend its nuclear program and reopen the Strait of Hormuz. An Iranian foreign ministry spokesperson, cited by Iran's ISNA news agency, stated that Tehran would communicate its response to the offer.

U.S. President Donald Trump commented that he believed Iran wanted an agreement.


Market context

The recent price movements reflect rapid market reactions to developments in diplomatic talks. The earlier one-day decline and the subsequent partial rebound illustrate sensitivity to evolving expectations about conflict resolution.


Conclusion

Crude prices rebounded on Thursday as traders continued to assess reports that mediators were closing in on a concise memorandum that could end the conflict. Key elements of any settlement - including the U.S. demands on Iran's nuclear program and the status of the Strait of Hormuz - remained unresolved and were actively under review by Iranian authorities.

Risks

  • Uncertainty over the final terms of any agreement - key U.S. demands such as suspension of Iran's nuclear program and reopening of the Strait of Hormuz remained unresolved, which could sustain market volatility.
  • Market sensitivity to evolving diplomatic reports - the prior session's roughly 7% slide shows that shifts in perceptions about the peace process can prompt significant price swings in oil and related sectors.

More from Commodities

Basis Holds Steady as Frost Threat Looms Over Drought-Stressed Winter Wheat May 6, 2026 PJM Weighs Major Market Overhaul as Data Center Demand Strains Capacity May 6, 2026 Middle East Conflict Spurs Shift Toward Long-Term LNG Shipping Contracts, NextDecade Executive Says May 6, 2026 Ted Turner’s Unfiltered Lines: A Collection of Notable Quotes May 6, 2026 European Gas Prices Retreat as Prospects Rise for U.S.-Iran Agreement May 6, 2026