Oil markets had one of their most dramatic sessions in months on May 6, with both major crude benchmarks plunging after reports surfaced that the US and Iran are closing in on a framework agreement. Brent crude fell more than 11% intraday, briefly dipping below $100 per barrel. West Texas Intermediate followed the same script, sliding over 11% to trade below $91 per barrel.

The catalyst: a reported one-page draft deal that would reopen the Strait of Hormuz, establish an immediate ceasefire, and lay groundwork for renewed nuclear negotiations. Axios, Bloomberg, and Reuters all confirmed progress on the framework, giving traders enough confidence to aggressively unwind the geopolitical risk premium that had been baked into crude prices for months.

Why the Strait of Hormuz matters this much

Roughly a fifth of the global oil supply passes through this narrow waterway between Iran and Oman every single day. When tensions flare around it, traders price in the possibility that millions of barrels could vanish from the market overnight. When those tensions ease, the premium evaporates just as fast.

The draft agreement reportedly goes beyond just the shipping lane. It includes provisions for nuclear negotiations, which suggests both sides are treating this as more than a temporary de-escalation.

Crypto’s reaction: risk-on mode engaged

Bitcoin traders appeared to internalize this quickly. Price dynamics during the May 6-7 window reflected anticipation that Bitcoin would hold above $66,000, a level that had served as a psychological floor during recent trading sessions.

Prediction markets added another data point to the optimism. A Polymarket contract tracking the likelihood of a US-Iran nuclear deal by June 30, 2026, jumped to over 31% probability following the news.

What this means for investors

For oil traders, the immediate risk is a snapback rally if talks stall or collapse. Brent briefly trading below $100 represents a significant repricing, and if the geopolitical premium needs to be rebuilt, the move back up could be just as violent as the move down.

The Polymarket probability sitting at 31% means the market assigns roughly a two-in-three chance that this deal does not happen by the end of June. If the deal progresses, expect further downside in oil and continued tailwinds for risk assets. If it falls apart, the reversal could catch overleveraged traders off guard in both markets simultaneously.

One thing worth monitoring is how energy-intensive crypto mining operations respond to potentially lower electricity costs. Mining profitability is directly tied to energy prices, and a sustained decline in crude could improve margins for miners, particularly those running on natural gas-powered facilities.