- Oil prices dropped after Trump announced a deal with Iran to reopen the Strait of Hormuz
- WTI crude futures fell 4.77% to $80.83 per barrel, Brent crude declined about 4% to $83.77
- The deal ends the U.S. naval blockade and removes tolls on the Strait of Hormuz
Oil prices fell after U.S. President Donald Trump said Washington had completed an agreement with Iran that would reopen the Strait of Hormuz, a key route for global crude shipments.
WTI crude futures for July delivery dropped 4.77% to $80.83 a barrel, while Brent crude futures for August delivery fell about 4% to $83.77 a barrel.
The decline extended a broader retreat in oil prices as traders responded to signs that a prolonged disruption to energy flows through the Strait of Hormuz could ease.
"The Deal with the Islamic Republic of Iran is now complete," Trump said in a post on Truth Social. Hormuz would reopen without a toll system and the United States would end its naval blockade of Iran, he said.
"Ships of the World, start your engines," Trump said. "Let the oil flow!"
Route Critical To Global Supply
The Strait of Hormuz handled about one-fifth of global oil supplies before tanker traffic dropped sharply in early March following Iranian attacks. The disruption created what has been described as the largest interruption to oil supplies on record.
Trump later said the waterway would reopen on Friday, the same day officials are expected to sign a formal agreement in Switzerland.
"With the opening of the Strait upon the signing of the Deal on Friday, for purposes of mine removal, oil will flow on both ends again for the Region, and the World!" he said.
The reopening would provide relief for oil exporters in the Persian Gulf and for the global shipping industry, although challenges remain before normal traffic can resume. These include mine-clearing operations and questions over how Iran intends to manage vessel movements through the passage.
Officials Confirm Progress
Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed that an agreement had been reached, but said the text would only be released after the signing ceremony in Switzerland.
U.S. Vice President JD Vance said he "certainly" planned to attend the event and that Trump could also participate.
Pakistan Prime Minister Shehbaz Sharif said on Sunday that the United States and Iran had agreed to an immediate and permanent end to military operations across all fronts, including Lebanon. Sharif has acted as a mediator between the two countries.
"We would like to thank the United States of America and the Islamic Republic of Iran for their commitment to finding a diplomatic solution to the conflict," Sharif said.
He said mediators would hold meetings this week ahead of technical discussions and the official signing ceremony.
Market Focus Shifts
Oil prices had surged in the early stages of the conflict but have moved lower in recent weeks as Washington and Tehran repeatedly signalled that an agreement was within reach.
Prices also came under pressure as some crude shipments through Hormuz resumed, developed economies released emergency oil reserves and major importers, including China, reduced purchases.
Investors are now watching how quickly shipping activity can recover once the agreement is formally signed and the route reopens.
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