Key facts
- A preliminary U.S.-Iran agreement to end their war and reopen the Strait of Hormuz has been announced.
- Oil prices fell to a three-month low following the U.S.-Iran deal.
- European natural gas prices dropped 6% after the agreement.
- Crude futures fell approximately 5.5% on the news.
- Copper prices increased by 1.4% as growth fears eased.
- Latin American airline shares surged due to lower fuel costs.
- The U.S. emergency crude oil supply is at its lowest point since 1983.
- The U.S. plans to release 172 million barrels of crude oil.
- Restoring oil and gas supplies to pre-war levels is expected to take months.
- Zimbabwe's central bank cut interest rates, a global first.
A preliminary U.S.-Iran agreement to end their war and reopen the Strait of Hormuz has triggered a substantial decline in global energy prices. Crude futures dropped approximately 5.5%, hitting a three-month low, while European natural gas prices fell 6%. President Trump announced a memorandum of understanding to end the Iran war and reopen the vital shipping lane. Executives anticipate oil prices could fall below $80 per barrel within weeks if the agreement is fully implemented. Citigroup has revised its Brent crude forecasts for 2026 and 2027 downwards.
The easing of geopolitical tensions has also boosted other markets. Copper prices increased by 1.4% as concerns over global economic growth subsided, leading to increased demand for metals and significant gains in mining stocks. Latin American airline shares surged as lower fuel costs eased financial pressures for carriers such as LATAM Airlines, Copa Holdings, Aeromexico, Volaris, and Azul. JPMorgan Asset Management suggests that falling oil prices could significantly benefit global stock markets by alleviating inflation worries and potentially enabling central banks to cut interest rates.
However, the immediate impact on oil supply recovery is projected to be slow. Restoring oil and gas supplies to pre-war levels is expected to take months, meaning that immediate relief from high inflation is unlikely, according to ECB President Lagarde, who welcomed the news. China's strategic oil stockpiling has previously buffered global prices, but a potential return to significant crude buying following the deal could reignite inflationary pressures, according to Bloomberg Economics. In the U.S., gasoline prices have fallen for three consecutive weeks, now standing just over $4 per gallon, with Brent crude around $83 and WTI around $80 per barrel. Concurrently, the U.S. emergency crude oil supply has reached its lowest point since 1983, even as the Trump administration plans to release 172 million barrels to mitigate fuel price increases.
US spot petrochemical prices declined last week due to reduced tensions impacting export demand, though operational issues on the U.S. Gulf Coast limited steeper price drops. Meanwhile, India's economy benefits from lower oil import costs and eased inflation risks, but faces domestic challenges from early monsoon weakness and expected El Niño conditions. Zimbabwe's central bank has implemented a global first by cutting interest rates, coinciding with the energy market's easing.