Oil Drops on US-Iran Peace Deal

Crude oil plunged more than 4% to around $81 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.

Crude oil fell 3.2% to $84.88 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.

Crude oil fell more than 3% to below $85 per barrel on Friday, reaching an eight-week low as hopes increased that the US and Iran could be close to an interim peace agreement, despite remaining uncertainties. Officials said both sides are moving toward a deal to reopen the Strait of Hormuz, potentially in time for the upcoming G7 meeting. Iran’s Foreign Minister Abbas Araghchi said a Memorandum of Understanding between the two countries had never been closer, supporting expectations that the prolonged conflict could be nearing an end. However, traders remain cautious after previous reports of breakthroughs failed to materialize. Risks remain, with reports of US forces intercepting Iranian drones near commercial vessels. Prices briefly recovered after President Trump cast doubt on the reported draft agreement, saying the published terms did not reflect the agreement discussed.