Oil Prices Slide Nearly 5% After US-Iran Peace Deal Announcement

Global oil prices fell sharply on Monday after the United States and Iran announced a framework agreement to end months of conflict, raising expectations that the vital Strait of Hormuz shipping route will soon reopen.

Brent crude, the international benchmark, dropped 4.3 per cent to $83.55 per barrel, while US West Texas Intermediate crude fell 4.9 per cent to $80.74, as traders reacted positively to the prospect of easing tensions in the Middle East.

The breakthrough came after Pakistan, which has been mediating between Washington and Tehran, revealed that both countries had agreed on a peace framework.

Pakistan's Prime Minister, Shehbaz Sharif, said a formal signing ceremony would take place in Switzerland on June 19.

US President Donald Trump also welcomed the development, declaring on social media: “Let the oil flow!”, while Iran's Deputy Foreign Minister, Kazem Gharibabadi, confirmed that an agreement had been finalised.

The Strait of Hormuz, a strategic waterway through which about 20 per cent of global oil and liquefied natural gas supplies pass, has remained largely inaccessible since fighting erupted between the US, Israel and Iran in February. 

Concerns over disruptions to energy supplies had pushed Brent crude prices from around $70 per barrel before the conflict to as high as $120 during the hostilities.

Despite the market's positive reaction, analysts cautioned that uncertainty remains over how quickly normal operations can resume.

Vandana Hari, founder of energy market consultancy Vanda Insights, said the lack of details surrounding the agreement could continue to fuel volatility in oil markets in the coming days.

Experts also warned that reopening the shipping route may not immediately restore oil flows to pre-conflict levels. 

According to industry analysts, mines reportedly laid in the waterway would need to be cleared, while a backlog of oil tankers waiting to transit the strait could delay a full return to normal operations.

Investor optimism extended beyond energy markets, with major Asian stock indices posting strong gains.

Japan's benchmark Nikkei 225 rose 4.7 per cent, while South Korea's Kospi advanced more than 5.2 per cent, reflecting hopes that easing tensions in the Gulf will help stabilise global energy supplies and support economic growth.