Oil prices tumbled more than 5% and stock markets surged on Monday after the United States and Iran announced a framework agreement to end their three-month war, with US President Donald Trump declaring the Strait of Hormuz would be reopened. Brent crude dropped to $82.84 a barrel, while Japan's Nikkei 225 closed 5% higher and the S&P 500 rose 1.6% in early trading as investors welcomed what Trump, in a post on his Truth Social platform, called “the Deal with the Islamic Republic of Iran.” “Let the oil flow!” he wrote.
The breakthrough came after Pakistan-mediated talks, with Iran’s deputy foreign minister Kazem Gharibabadi confirming on state television that a deal had been finalised. An official signing ceremony is scheduled for Friday, 19 June in Switzerland. Pakistan’s Prime Minister Shehbaz Sharif said both sides had declared “the immediate and permanent termination of military operations on all fronts, including in Lebanon,” where Israel has been fighting the Iran-backed Hezbollah group.
“Oil drops 5% and markets rally after US and Iran agree framework peace deal, reopening Strait of Hormuz”
But the euphoria was tempered by a lack of published detail. Vandana Hari from Vanda Insights warned that the absence of specifics was “likely to inject unease and uncertainty into the market,” predicting a week of volatility. The Strait of Hormuz, through which about 20% of the world’s oil normally passes, had been effectively closed since US and Israeli airstrikes on Iran on 28 February. Trump claimed on Truth Social that ships laden with oil were “starting to move” along a safe southern route, but shipping companies and insurers said they still considered the passage risky until mines were cleared.
European leaders offered cautious praise. European Commission President Ursula von der Leyen said the agreement should allow for the “immediate reopening” of the Strait of Hormuz and insisted “freedom of navigation must be restored toll-free.” EU foreign policy chief Kaja Kallas called it a “potential breakthrough” that could create space for deeper talks on Iran’s nuclear programme. UK Prime Minister Keir Starmer welcomed the announcement but reiterated that “Iran must never have a nuclear weapon.”
However, Israel – which was not part of the negotiations – has not signed on. Foreign Minister Itamar Ben Gvir said the deal would not be binding, telling Israeli media: “Israel is not subordinate to the United States. We are an independent and sovereign country.” Fighting between Israel and Hezbollah has continued, with an Israeli air campaign and ground invasion uprooting some 1.2 million people. Iran’s foreign ministry spokesperson Esmaeil Baghaei insisted Lebanon is “an integral part of the agreement,” calling for respect of its territorial integrity.
The conflict, which escalated from joint US-Israeli strikes in February, has killed thousands, upended energy markets, and stoked global recession fears. With the nuclear programme deferred to future talks and Israel yet to commit, the framework deal leaves critical questions unresolved even as the G7 leaders gather in Évian this week.