Oil Prices Plunge After Trump Says Iran Deal Reopens Strait of Hormuz

Oil prices fell sharply overnight, between Sunday and Monday, after U.S. President Donald Trump said the United States and Iran had reached an agreement to reopen the Strait of Hormuz, one of the world’s most important shipping lanes. The move signaled an end to the maritime blockade and immediately hit crude futures in the U.S. and Europe.

U.S. West Texas Intermediate futures dropped about 4.8% to around $80.80 a barrel, while Brent, the global benchmark, fell about 3.9% to $83.89 a barrel. Trump wrote on his social network that the deal with the Islamic Republic of Iran had now been completed.

According to Trump, the strait will reopen without tolls and the United States will end the maritime blockade imposed on Iran at once. He wrote, “Ships of the world, fire up your engines. Let oil flow.”

The Strait of Hormuz is a strategic chokepoint that, before the crisis, carried about 20% of global oil supplies. Disruption to tanker traffic because of Iranian attacks and regional escalation had already caused major supply-chain disruption and pushed energy prices higher. Investors see the reopening of the route as a way to restore much of the oil supply and ease fears of a global energy shortage.