Oil prices dropped by more than 4% on Monday after the United States and Iran announced an agreement to end the conflict and reopen the Strait of Hormuz, easing concerns over global energy supplies.
West Texas Intermediate (WTI) crude fell 4.39% to $81.15 per barrel in Asian trading as investors responded positively to news of the breakthrough agreement, reportedly reached with the mediation of Pakistan.
The sharp decline reflects expectations of improved oil flows and reduced geopolitical risk in the region.
Strait of Hormuz to reopen
According to the announcement, Washington and Tehran agreed to an “immediate and permanent” end to military operations, with reports indicating that the arrangement also covers other areas of tension across the Middle East.
US President Donald Trump confirmed that the agreement with Iran had been finalised and announced the reopening of the Strait of Hormuz.
The strategic waterway carries approximately 20% of the world’s oil supply and is considered one of the most important shipping routes for global energy markets.
Shipping restrictions to be lifted
Trump said the agreement would restore freedom of navigation and remove restrictions affecting maritime transport, allowing vessels to resume normal operations.
The reopening of the Strait of Hormuz is expected to ease pressure on international supply chains and energy markets that had faced significant disruption since the outbreak of hostilities.
Iran confirms end of hostilities
Shortly after the US announcement, Iran confirmed that the agreement marks the “immediate end” of hostilities.
However, diplomatic sources cautioned that the deal represents an initial framework rather than a final peace treaty, with further negotiations expected before a comprehensive settlement can be reached.
Analysts said the reaction in oil prices reflects optimism that the agreement could reduce uncertainty in global markets and help stabilise energy supplies in the months ahead.
Also read: Inside the US-Iran draft agreement: 14 points explained
For more videos and updates, check out our YouTube channel
