Oil slides 5% on initial US-Iran deal, easing Strait of Hormuz fears

Oil price losses deepened on Monday as expectations of resumed flows through the Strait of Hormuz after an initial US-Iran deal weighed on markets.

International benchmark Brent crude traded at $83.47 per barrel at 09.26 a.m. local time (0626 GMT), down around 4.42% from the previous close of $87.33.

US benchmark West Texas Intermediate (WTI) fell 5% to $80.59 per barrel, compared with $84.88 in the previous session.

Prices fell by about 5% on Friday after US President Donald Trump said planned strikes on Iran had been cancelled and that a deal to permanently end the US-Israeli war with Iran could be signed within days, easing fears that tit-for-tat attacks earlier last week could escalate into a broader conflict.

Oil prices extended losses on Monday after the US and Iran reached an initial agreement to end the war and resume traffic through the Strait of Hormuz.

Early on Monday, Brent crude fell 4.9% from Friday’s close to a session low of $83.05 a barrel, its lowest level since March 6, while WTI dropped 5.7% to $80.01 a barrel, marking its weakest level since March 10.

Pakistani Prime Minister Shehbaz Sharif announced early Monday that the US and Iran have reached a peace agreement following intensive negotiations, with both sides declaring an immediate and permanent end to military operations across all fronts, including in Lebanon.

In a post on the US social media platform X, Sharif said that the official signing ceremony is scheduled to take place on June 19 in Switzerland.

Trump also said that an agreement with Iran had been finalized and said he was authorizing the reopening of the Strait of Hormuz and the removal of a US naval blockade. In a post on his Truth Social platform, Trump signaled the resumption of maritime traffic and energy shipments through the strategic waterway, writing: “Ships of the World, start your engines. Let the oil flow!”

Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that a memorandum of understanding (MoU) between Iran and the US has been finalized and will be officially signed on June 19 in Geneva, Switzerland, according to remarks carried by Iran’s semi-official Mehr News Agency. He also said the end of the US naval blockade against Iran would begin Sunday night US time.

Gharibabad said the draft MoU includes Iran’s key positions and the full text will be made public after the official signing, with further details to be explained through public media.

Meanwhile, in an interview, Trump told The New York Times on Sunday that if Iran did not reach the nuclear agreement with the US he would restart military attacks on Iran or make the US “the guardian of the Middle East” in return for 20% of the region’s revenues.

He also said the agreement he reached with Iran would ultimately assure that the Strait of Hormuz is “permanently toll free.”

• International benchmark Brent crude
• US benchmark West Texas Intermediate (WTI)