West Asia War: Oil prices fell sharply on Monday after the United States and Iran reached a breakthrough agreement aimed at ending months of conflict in the Middle East and reopening the Strait of Hormuz,
easing concerns over disruptions to global energy supplies.
US crude futures for July delivery dropped nearly 5% to around $80.83 a barrel, while Brent crude, the international benchmark, fell about 4% to $83.77 a barrel as traders priced in lower geopolitical risk, news agency Reuters reported.
The sell-off followed announcements from US President Donald Trump and Pakistani Prime Minister Shehbaz Sharif confirming that Washington and Tehran had agreed to an immediate and permanent halt to military operations.
In a post on Truth Social, Trump said the agreement would allow the toll-free reopening of the Strait of Hormuz and the removal of the US naval blockade of Iran. He added that the strait would officially reopen on Friday, when a peace agreement is expected to be signed in Switzerland.
“Ships of the World, start your engines. Let the oil flow!” Trump said in a post on Truth Social, adding later that the waterway would officially reopen on Friday following a peace-signing ceremony in Switzerland.
The Strait of Hormuz, through which about one-fifth of global oil supplies typically pass, had been severely disrupted since early March amid escalating hostilities between the US and Iran. The disruption fuelled sharp swings in oil prices and raised fears of a prolonged supply shock.
The easing of geopolitical tensions lifted sentiment across financial markets. US stock futures advanced, with Dow futures rising 0.7%, S&P 500 futures gaining 0.9%, and Nasdaq 100 futures climbing 1.4%.
Asian markets also rallied. South Korea’s Kospi surged more than 5%, Japan’s Nikkei 225 gained 3.6%, and Australia’s S&P/ASX 200 rose 1.3%.
The conflict began in late February following US-Israeli strikes on Iran and expanded across the region, including Lebanon.
