Oil Prices Drop After U.S.-Iran Agreement to Reopen Hormuz Strait

Oil prices fell about 5% after news of a U.S.-Iran agreement to end the war and reopen the Strait of Hormuz, reaching their lowest level since the fighting began in late February and early March. Brent crude traded at $83 a barrel, while U.S. crude, West Texas Intermediate, dropped more sharply to $80 a barrel.

President Donald Trump said on Truth Social that “the deal with Iran is done.” He said the Strait of Hormuz would reopen without any tariff-collection mechanism and that the United States would end the naval blockade it had imposed on Iran. “World’s ships, turn on your engines,” he wrote.

The accord ends a prolonged period of failed ceasefire attempts. On April 18, Iran had already agreed to reopen the strait, but within hours it reversed course, saying the United States and Israel had violated the terms of the arrangement, and it resumed firing on ships trying to pass. On June 11, Trump canceled a planned airstrike on Iran and said the sides were close to a deal.

Analysts warned that signing the agreement would not necessarily push oil back immediately to prewar levels, around $60 a barrel. John Goh, senior oil-market analyst at Sparta in Singapore, said traders expect roughly 100 million barrels of crude stuck on vessels along the strait to begin entering the market once the deal is implemented, but he added that the overall picture will not change materially as long as Hormuz remains effectively closed. He said it could take months for supply to return to normal.