Oil prices fell to their lowest levels since March on Monday after US President Donald Trump declared the Iran deal "complete" and announced the "immediate toll-free reopening of the Strait of Hormuz," according to Business-Today. The development eased fears over disruptions to one of the world's most important energy shipping routes.
Price Movements
Brent crude futures dropped $3.58, or 4.1%, to $83.75 a barrel by 0004 GMT on Monday, while US West Texas Intermediate (WTI) crude fell $4.01, or 4.72%, to $80.87 a barrel, Business-Today reported. Both benchmark contracts had already declined more than 3% on Friday. The table below summarises the price changes:
| Contract | Price Change ($) | Percentage Change | New Price |
|---|---|---|---|
| Brent crude | -$3.58 | -4.1% | $83.75/bbl |
| WTI crude | -$4.01 | -4.72% | $80.87/bbl |
The Fundamental Driver: US-Iran Deal and Strait of Hormuz
The sharp fall followed signs of a possible breakthrough in the Iran crisis and expectations that oil supplies moving through the Strait of Hormuz would return to normal, according to Business-Today. The Strait of Hormuz, a crucial corridor for global oil trade, had effectively remained closed since the conflict erupted in late February. According to an Iranian lawmaker, some commercial vessels had been paying an average of about $2 million to transit the waterway.
Analysts had warned that continued disruption could drive oil prices into the mid-to-high $100 range and push US petrol prices to record levels. Bob McNally, President of Rapidan Energy, told ABC's This Week that fuel prices could have risen to as much as $5 a gallon without an agreement, the source reported.
Supply Side Intelligence: Diplomatic Breakthrough
US President Donald Trump announced the breakthrough on Truth Social, saying the agreement with Tehran had been finalised and authorising the removal of restrictions on maritime traffic. According to Business-Today, Trump wrote:
“The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorise the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorise the immediate removal of the United States Naval blockade.”
The president added, “Ships of the World, start your engines. Let the oil flow!” Trump's announcement came hours before a UFC event at the White House marking his 80th birthday.
The development followed days of diplomatic efforts involving several mediators, including Pakistan. Prime Minister Shehbaz Sharif said a peace agreement had been reached after intensive negotiations between Washington and Tehran. In a post on X, Sharif stated, “Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and the Islamic Republic of Iran has been REACHED. Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon.”
Sharif confirmed that the agreement will be formally signed in Switzerland on June 19.
Demand Side and Outlook
While immediate demand-side indicators remain unchanged, the reopening of the Strait of Hormuz removes a significant supply risk premium from crude prices. With the naval blockade lifted, oil markets are now pricing in a return to normal supply conditions. Traders will be watching for the formal signing in Switzerland and any further details on the terms of the Iran deal.
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