Key facts
- The U.S. and Iran signed an interim agreement to end their war.
- The deal includes a 60-day ceasefire extension and reopening of the Strait of Hormuz.
- U.S. sanctions on Iran will be lifted, and Iranian assets unfrozen.
- President Trump threatened renewed attacks if Iran violates the agreement.
- Oil prices fell significantly, with Brent crude reaching a 3-1/2-month low.
Oil prices fell sharply on Thursday after the U.S. and Iran signed an interim agreement to end their conflict, reopen the Strait of Hormuz, and waive U.S. sanctions on Tehran's oil. Brent crude futures dropped 2.69% to $77.41 a barrel, and U.S. West Texas Intermediate fell 3.07% to $74.43 a barrel, with Brent hitting its lowest level since early March. The agreement begins a 60-day negotiation period during which Iran will allow toll-free passage through the Strait of Hormuz, a critical shipping lane, with full capacity restoration expected within 30 days. The preliminary accord defers difficult issues like Iran's nuclear program and includes a $300 billion financing plan for Iran's recovery. Analysts expressed caution, noting that supply might remain tight due to potential reluctance from shipowners to re-enter the region and the possibility of the agreement collapsing. The International Energy Agency warned that if the deal is implemented, this year's supply crisis could turn into a significant glut by 2027, with supply outstripping demand by over 5 million barrels per day. Additionally, expectations that the U.S. Federal Reserve might raise interest rates later this year are weighing on the oil market by potentially slowing economic growth and suppressing demand. President Trump had previously threatened to resume bombing if Iran's leaders "don't behave," and the sell-off extended as markets priced in the return of Iranian barrels. Some market participants believe crude demand may rise faster than supply, limiting price declines to pre-war levels.