Oil: Brent Drops 5% then Rebounds Following New Strikes in Iran

A Barrel Swayed Between Diplomatic Hopes and New Strikes

On Tuesday, May 27, Brent crude fell by around 5%, hitting a more than one-month low, as traders anticipated a peace framework between the United States and Iran and a gradual reopening of the Strait of Hormuz. The plan discussed in Doha includes ending hostilities, a gradual lifting of certain sanctions, the return of commercial ships to circulation, and the unfreezing of Iranian assets.

The movement reversed within hours: following the announcement of new American strikes on an Iranian military site in Hormozgan province, crude regained 2 to 3%, with Brent hovering around $97 per barrel. Tehran condemned this as a « serious violation » of the ceasefire in place for nearly seven weeks, while the Revolutionary Guards announced they had retaliated by targeting a U.S. base in the region.

This sequence extends that of the conflict around the Strait of Hormuz, a passageway for about one-fifth of the world's oil. At the heart of negotiations, each side's positions remain far apart on nuclear issues, the scope of sanctions, and the withdrawal of American forces, maintaining a high geopolitical risk premium on the barrel.

A swift transmission to long-term rates and inflation expectations

The energy shock is already spreading beyond oil markets. In the United States, the average rate for 30-year mortgage loans rose to 6.65% in the week of May 22, a nine-month high, according to data from the Mortgage Bankers Association. This increase reflects the pressure on Treasury yields, driven by the rise in inflation expectations.

The U.S. consumer price index stood at 3.8% year-on-year in April, according to Reuters, compared to 2.9% in August 2025. This reacceleration fuels the debate within the Federal Reserve on how long interest rates should remain high, as recently highlighted by Neel Kashkari, president of the Minneapolis Fed. In France, inflation has also started to rise again, weighed down by energy prices.

The statements of monetary officials, however, reflect intentions at a given moment and do not prejudge the actual decisions of future committees, which will depend on the inflation and activity statistics published between now and then. The data cited is also subject to revision as further publications emerge.

Energy-Intensive Sectors and Import-Driven Economies in the Spotlight

The sensitivity of the barrel to diplomatic developments directly impacts sectors most exposed to energy costs. Air transport, chemicals, steel, and logistics see their margins squeezed with each price hike, without a clear outlook on the medium-term price trajectory. The volatility itself complicates corporate hedging policies.

For importing economies, the energy bill adds to already identified vulnerabilities. China's real GDP growth reached +5.0% year-on-year in the first quarter of 2026, at the top of the official range of 4.5 to 5.0%, but the People's Bank of China is concerned about a slowdown in the second quarter amid weak domestic demand and a real estate crisis. In the eurozone, the European Central Bank warned in its May Financial Stability Review that the fallout from the war in Iran is amplifying the continent's financial vulnerabilities.

The outcome of negotiations between Washington and Tehran remains highly uncertain, and available information can quickly become outdated due to a leak or political announcement. Energy prices and geopolitical risk premiums are likely to change abruptly, justifying a cautious reading of the levels observed in recent sessions.