Oil prices fell in early Monday trading in Asia after U.S. and Iranian officials announced they had reached an agreement to end hostilities and reopen the Strait of Hormuz, more than 100 days after its closure.
At the time of writing, Brent crude had dropped 3.95% to trade at $83.88 per barrel, while WTI fell 4.62% to $80.96 per barrel.
Oil prices, which peaked in mid-May, have been gradually trending downward in recent weeks on speculation of a deal, even after multiple escalatory strikes.
On Sunday night, U.S. President Donald Trump declared that a deal with Iran had been completed, writing on social media that “oil will flow” through the Strait of Hormuz once the agreement is formally signed on Friday.
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that the text of a memorandum of understanding had been finalized and that a formal signing ceremony would take place in Switzerland on Friday.
“The deal with the Islamic Republic of Iran is now complete,” Trump wrote on his Truth Social platform at around 5:30 p.m. in Washington (2130 GMT) on Sunday.
His post came shortly after Pakistani Prime Minister Shehbaz Sharif, whose country has served as a mediator, announced that a deal had been struck early Monday local time.
The precise terms were not immediately disclosed. Sharif said in a post on X that the agreement called for “the immediate and permanent termination of military operations on all fronts, including in Lebanon.”
In a statement, the secretariat of Iran’s Supreme National Security Council said military operations on all fronts, including Lebanon, would end permanently starting Monday night.
Trump said the Strait of Hormuz—a major shipping route for global oil and gas supplies that Iran had effectively disrupted for months—would reopen on Friday, and that he had ordered the end of the U.S. blockade of Iranian ports.
“Ships of the world, start your engines. Let the oil flow!” Trump wrote.
“The lack of details, especially on freedom of shipping, is a concern, but not one that should constrain markets today as the surge in risk appetite plays out,” said Sean Callow, a senior FX analyst at ITC Markets, according to a Reuters report.
Iran has struck Israel and Gulf states hosting U.S. bases and had effectively disrupted passage through the Strait of Hormuz, pushing up global energy prices. U.S. forces had also blocked Iranian ports in response.
The war has become a political liability for Trump at home, with members of Congress and public opinion polls showing growing frustration over rising gas prices ahead of November’s midterm elections.
However, Trump has also faced pressure from members of his own party who insist that Iran’s nuclear program must be completely dismantled.
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