Energy markets could see a sharp reversal if tensions ease in the Middle East, as U.S. officials signal that a diplomatic breakthrough with Iran may be within reach.
The outlook comes after President Donald Trump said earlier Monday that negotiations with Iran have been “very good and productive,” announcing a five-day pause on planned U.S. strikes against Iranian energy infrastructure to allow talks to continue.
Against that backdrop, U.S. Energy Secretary Chris Wright said oil prices could fall significantly if a deal leads to the reopening of the Strait of Hormuz, a critical global shipping route that has faced disruptions in recent weeks.
Wright made the comments during an appearance on FOX Business’ “Varney & Co.” with host Lauren Simonetti, emphasizing how closely energy markets are tied to developments in the region.
“They would go down quite a bit. If we see a pathway to have the Strait of Hormuz open soon and energy flowing again, you’d see energy prices drop pretty significantly,” Wright said.
Global markets have been reacting to reduced traffic through the strategic waterway, one of the world’s most important energy chokepoints. Even temporary disruptions have driven fuel costs higher for consumers.
Wright suggested that the trajectory of energy prices will depend largely on whether Iran chooses to de-escalate and engage in negotiations.
“That could happen if a peace agreement is reached… If Iran thinks enough is enough, and they’re willing to make a deal… Then there’ll be a deal,” Wright said.
For now, officials caution that short-term volatility is likely to continue as negotiations unfold, though a sustained diplomatic breakthrough could quickly stabilize markets.
