Oil prices plunged in early Asian trading on Monday after Pakistan announced that the United States and Iran had reached a peace deal, with President Donald Trump declaring the Strait of Hormuz open and ordering the immediate removal of the US naval blockade. Brent crude fell 4% to $83.81 a barrel, while US-traded oil dropped 4.7% to $80.89.
Pakistan’s Prime Minister Shehbaz Sharif said the agreement would be formally signed on Friday, 19 June, in Switzerland. Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed the deal on state TV. Trump posted on Truth Social: “The Deal with the Islamic Republic of Iran is now complete. … Ships of the World, start your engines. Let the oil flow!”
“US and Iran reach peace deal reopening Strait of Hormuz; oil prices fall but experts warn supplies will take months to normalise.”
Yet energy experts warned that the resumption of normal oil and gas flows through the Strait – through which roughly 20% of the world’s oil and liquefied natural gas normally passes – will take time. “It’s going to take time for people to feel comfortable and for insurance to be in place … particularly to get people on the ground to restart some of these assets,” said Daniel Evans, global head of fuels and refining research at S&P Global Energy. Andrew Lipow of Lipow Oil Associates said mines would need to be cleared from the waterway, a process that could take from a few weeks to up to six months, and that a large backlog of tankers must be addressed.
The deal comes after more than 100 days of war, which began when the US and Israel launched airstrikes on Iran on 28 February. Tehran had effectively shut the Strait by threatening vessels. Global energy markets have been volatile, with Brent crude peaking at about $120 during the conflict.
However, the peace deal faces potential disruption. Israel attacked Beirut’s southern suburbs on Sunday, claiming it targeted a Hezbollah command centre after rockets were fired into northern Israel. Trump warned both sides: “Let’s not blow it.” The attack came hours before the deal was announced and as Trump turned 80.
Asian stock markets rallied on the news, with Japan’s Nikkei 225 up 4.3% and South Korea’s Kospi rising more than 5%. The region, heavily dependent on Middle East oil, had been hit hard by high energy prices.
Iranian President Masoud Pezeshkian insisted his country “will not bow down to any power” after pro-Revolutionary Guard supporters protested the deal, but said the government was accountable to the Iranian people. The agreement largely returns to the pre-war status quo, but with thousands dead and Iran gaining leverage over the Strait.