Key facts
- Brent crude futures fell to a two-month low of $83.75 a barrel.
- WTI crude futures declined to $80.87 a barrel.
- An initial agreement between the U.S. and Iran to end hostilities and reopen the Strait of Hormuz has been announced.
- President Trump stated the deal is complete and ships will pass through the Strait of Hormuz toll-free.
- The Strait of Hormuz, crucial for global energy shipments, has been closed for over three months.
- Analysts warn that normalizing shipping through the Strait could take months.
Oil prices dropped to their lowest levels since March, with Brent crude futures falling 4.10% to $83.75 a barrel and U.S. West Texas Intermediate crude declining 4.72% to $80.87. This decline followed announcements from U.S. President Donald Trump and Iran's Deputy Foreign Minister indicating an initial agreement to end hostilities and restore shipping through the Strait of Hormuz. Trump stated the deal was complete, allowing ships to pass toll-free, while Iran confirmed negotiations on a broader agreement would continue during a proposed 60-day ceasefire. The Strait of Hormuz, a critical chokepoint for approximately one-fifth of global oil and LNG shipments, has been closed for over three months, significantly impacting supply. Market participants are now focused on the potential restoration of Middle Eastern oil output and exports. However, analysts caution that normalizing shipping traffic through the Strait could take months, and any damage to energy infrastructure could further delay recovery.