Oil Prices Tumble by 5% as Iran Opens Strait of Hormuz
Oil price losses deepened on Monday as expectations of resumed flows through the Strait of Hormuz after an initial US-Iran deal weighed on markets.
The international benchmark Brent crude traded at $83.47 per barrel, a more than 5% drop from the previous close of $ 88.30. US benchmark West Texas Intermediate (WTI) fell 5% to $80.59 per barrel, compared with $84.88 in the previous session.
Prices fell by about 5% on Friday after US President Donald Trump said planned strikes on Iran had been cancelled and that a deal to permanently end the US-Israeli war with Iran could be signed within days, easing fears that tit-for-tat attacks earlier last week could escalate into a broader conflict.
Oil prices extended losses on Monday after the US and Iran reached an initial agreement to end the war and resume traffic through the Strait of Hormuz.
Pakistani Prime Minister Shehbaz Sharif announced early Monday that the US and Iran have reached a peace agreement following intensive negotiations, with both sides declaring an immediate and permanent end to military operations across all fronts, including in Lebanon.
In a post on the US social media platform X, Sharif said the official signing ceremony is scheduled for June 19 in Switzerland.
Trump also said that an agreement with Iran had been finalised and said he was authorising the reopening of the Strait of Hormuz and the removal of a US naval blockade.
In a post on his Truth Social platform, Trump signalled the resumption of maritime traffic and energy shipments through the strategic waterway, writing: “Ships of the World, start your engines. Let the oil flow!”
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that a memorandum of understanding (MoU) between Iran and the US has been finalised and will be officially signed on June 19 in Geneva, Switzerland, according to remarks carried by Iran’s semi-official Mehr News Agency. He also said the end of the US naval blockade against Iran would begin Sunday night US time.
Gharibabad said the draft MoU includes Iran’s key positions and the full text will be made public after the official signing, with further details to be explained through public media.
Meanwhile, in an interview, Trump told The New York Times on Sunday that if Iran did not reach the nuclear agreement with the US, he would restart military attacks on Iran or make the US “the guardian of the Middle East” in return for 20% of the region’s revenues.
He also said the agreement he reached with Iran would ultimately ensure that the Strait of Hormuz is “permanently toll-free.” Oil Prices Dip Below $90 on Potential US-Iran Deal
