Oil prices dropped after President Donald Trump said an agreement with Iran had been reached and the United States would end its naval blockade on the country.
Oil prices took a sharp dive over the weekend after a breakthrough peace agreement between the United States and Iran raised hopes of an end to months of disruption in global energy markets.
Brent crude prices on Sunday fell 3.9% to about $84 a barrel, and US crude dropped 4.8% to about $81 a barrel. If oil settles at that level, it will be the lowest price for crude since March 4, just a few days into the war.
Anticipating a deal framework to be reached this weekend, oil settled below $90 a barrel on Friday for the first time since the first week of the war. Still, it has a long way to go to get back under $70, where it was before the United States and Israel launched attacks on Iran in late February.
According to CNN, traders reacted positively to news that Washington and Tehran had reached a deal aimed at reopening the strategically vital Strait of Hormuz, one of the world’s most important oil shipping routes. The development sparked a sell-off in crude, with Brent crude falling more than 4% and US benchmark West Texas Intermediate also posting steep losses.
The market had priced in significant geopolitical risk following months of conflict that disrupted oil flows through the region. With a ceasefire framework now in place and negotiations expected to continue, investors are betting that supply conditions will improve in the coming weeks.
Analysts say the prospect of oil tankers returning to normal operations through the Strait of Hormuz has eased fears of shortages and helped calm energy markets. However, experts caution that unresolved issues remain and further negotiations will be needed before a lasting settlement is secured.
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