Brent Drops on US-Iran Peace Deal

Brent plunged about 4% to below $84 per barrel on Monday, touching a two-month low after the US and Iran reached a peace agreement aimed at ending the Middle East conflict and reopening the Strait of Hormuz by the end of the week. President Donald Trump announced that oil shipments from the Persian Gulf could soon resume, including the lifting of a US blockade on Iranian ports. The agreement also reportedly includes provisions for dismantling Iran’s nuclear program, along with economic incentives if Tehran meets its commitments. Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that a deal had been reached and said the text would be released following a signing ceremony in Switzerland. Oil markets have faced significant disruption since the conflict erupted in late February, with the near-closure of the Strait of Hormuz affecting roughly one-fifth of global oil shipments.

Brent oil fell 3.4% to $87.3 per barrel as expectations increased that the US and Iran could reach an agreement to reopen the Strait of Hormuz, although officials warned a deal was not guaranteed. Prices declined about 6% this week but remain more than 20% higher since the US and Israel launched attacks on Iran on February 28. A Trump administration official said there is an 80% chance of a deal being signed soon, with the agreement potentially involving the reopening of Hormuz, removal of the naval blockade, dismantling of Iran’s nuclear program and economic incentives if Tehran complies. However, conflicting reports emerged after Iranian media published a draft proposal suggesting different terms, including US force withdrawals and reconstruction funding. President Trump said it did not reflect the agreed terms. Pakistan’s Prime Minister said a final text had been reached, while Iran’s foreign minister said an understanding was closer than ever but urged caution until finalized.

Brent crude oil fell more than 4% to below $86.5 per barrel on Friday, the lowest since early March, as hopes grew that the US and Iran could reach a peace agreement and end the conflict that has disrupted energy markets. Iran’s Mehr News Agency reported that a 14-point draft agreement includes the lifting of oil sanctions and a commitment from Tehran to reopen the Strait of Hormuz within 30 days, although the proposal still requires approval from Iranian authorities. President Trump said a deal could be signed as soon as this weekend in Europe. The reported agreement would also involve the release of frozen Iranian funds, the suspension of sanctions, and the withdrawal of US forces from the region. Despite improving sentiment, risks remain as tensions continue in the Strait of Hormuz, with reports of drones targeting commercial vessels. Iran has threatened to keep the waterway closed, though tanker traffic has started to increase in recent weeks.