Why did oil prices drop nearly 7% on Monday, and what caused them to rebound slightly on Tuesday?

Oil prices dropped nearly 7% on Monday due to market optimism over an Iran peace plan reportedly including a 60-day ceasefire extension and eventual reopening of the Strait of Hormuz. However, they rebounded about 3% on Tuesday after news of fresh U.S. military strikes on Iranian targets—described by Washington as defensive—which cast doubt on the speed and certainty of a final agreement.

What did Federal Reserve officials signal about future interest rate policy, and how are markets reacting?

Fed board member Christopher Waller signaled he would vote to remove language from the Fed’s recent policy statement indicating an 'easing bias', reflecting a shift toward tighter policy; meanwhile, Fed Chair Kevin Warsh—sworn in Friday—was granted equivocal support by President Trump, who said Warsh must 'do what he feels is best'. As a result, Fed futures are pricing in at least one rate hike over the next year, and central banks in the euro zone and Japan are expected to raise rates as soon as next month.

Oil Prices Drop on Iran Peace Hopes; Markets Mixed Amid Fed Uncertainty

May 26, 2026

Crude oil prices fell nearly 7% on Iran peace plan hopes before recovering slightly after U.S. strikes, while global stocks remained mixed amidst high gas prices and Federal Reserve policy speculation.

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