Brent crude oil prices fell sharply on Monday, dropping more than 4% to near $83 per barrel, after the United States and Iran reached a preliminary peace agreement aimed at ending months of conflict and reopening the Strait of Hormuz, one of the world’s most critical oil transit routes.
Brent settled at $82.76 per barrel, down about 5.24% on the day, marking its lowest level in two months, according to market data. West Texas Intermediate (WTI) also declined more than 5%, tracking the broader selloff in energy markets.
The agreement, announced by former U.S. President Donald Trump and confirmed by Iranian officials, includes plans to end hostilities and restore oil shipments through the Persian Gulf. Iranian Deputy Foreign Minister Kazem Gharibabadi said the deal text would be released after a signing ceremony expected in Switzerland later this week.
The Strait of Hormuz, which handles about one-fifth of global oil flows, had been heavily disrupted since the escalation of conflict earlier this year, contributing to sharp price volatility and supply concerns across global energy markets. The proposed reopening of the waterway has significantly eased immediate supply risk perceptions.
Market reaction was swift, with oil prices extending losses as traders priced in the return of disrupted barrels to the global market. Brent crude is now down more than 26% over the past month, though it remains about 13% higher year-on-year, reflecting lingering geopolitical risk premiums despite the latest de-escalation.
Analysts say the agreement, if implemented, could mark a turning point for global energy markets, but caution that details around enforcement, sanctions relief, and nuclear-related provisions remain uncertain.
The deal also includes reported provisions linked to Iran’s nuclear programme and potential economic incentives tied to compliance, though full terms are yet to be formally published.
Energy markets have remained highly sensitive to developments in the Middle East, with price swings largely driven by headlines on diplomacy, military activity, and the status of oil shipping routes through the Gulf.
