Oil prices drop 5%, Brent slips below $98

Oil drilling rigs

Oil slumped in early session today, May 25, following reports that Washington and Tehran are close a preliminary agreement to end the war and reopen the Strait of Hormuz to international shipping.

The New York Times reported that the two sides had agreed in principle to cease hostilities and fully reopen of the strait,  at the same time postponing discussions on Iran's nuclear program for later negotiations.

US officials confirmed that the agreement was not finalized yet, pending formal approval from US President Donald Trump and the Iranian Supreme Leader.

The Associated Press reported that the potential deal could allow Iran to resume its oil exports by lifting sanctions, in exchange for the release of billions of dollars in frozen Iranian assets during a 60-day negotiation period. This was met with criticism from some Republican lawmakers who see the agreement as too lenient on the Iranian side.