Oil prices fell sharply on Monday as Asian stock markets rallied after the United States and Iran announced an agreement to end the Middle East conflict, easing fears of supply disruption through the Strait of Hormuz. Brent crude for August delivery dropped 4.84% to $83.10 a barrel in early GMT trading, while U.S. West Texas Intermediate fell 5.73% to $80.02, reflecting relief that a major geopolitical risk to global energy flows may be receding.
The breakthrough came after a Pakistani mediator said Washington and Tehran had reached an immediate and permanent agreement to end the war on all fronts, including Lebanon. The U.S. and Iran both confirmed the deal shortly afterward. President Donald Trump said on Truth Social that the agreement with Iran was finalized and that the Strait of Hormuz would reopen without tolls. The strategic waterway normally carries about one-fifth of the world’s crude oil, but traffic had been heavily disrupted since fighting began in late February, pushing oil prices higher in previous weeks.
Iran’s deputy foreign minister, Kazem Gharibabadi, said on state television that the memorandum called for an immediate and definitive end to hostilities and military operations across the various fronts, including Lebanon. Pakistani Prime Minister Shehbaz Sharif said a signing ceremony is scheduled for Friday, June 19, in Geneva. Analysts said markets reacted quickly to the prospect of lower energy costs, even as they warned that the durability of the deal remains uncertain until more details are released.
Stephen Innes of SPI Asset Management said the news was the kind that moves markets at the opening and suggested investors were already repricing the “risk premium” tied to the Strait of Hormuz. He noted that a genuine reopening would reduce uncertainty for shipping companies, ease insurance pressures, and begin to unwind conflict-related market anxiety. Michael Wan of MUFG also cautioned that questions remain over the terms of the agreement, including the extent of financial support Iran may receive.
Asian equities surged in response. Tokyo’s Nikkei rose 5.41% to 69,593, while the broader Topix gained 3.62% to 4,022. In Seoul, the Kospi jumped 5.65% to 8,582. Sydney advanced 1.28%, Taipei climbed 2.63%, and Hong Kong’s Hang Seng edged up 0.37%. Analysts at Tokai Tokyo Intelligence said the deal could reassure markets by reducing inflation pressure from energy costs and encouraging buying across a wide range of stocks.
The U.S. dollar was steady, slipping 0.08% against the yen to 160.11, as investors shifted toward riskier assets. Gold also strengthened, rising 2.46% to $4,323 an ounce, as traders balanced optimism about peace with continued caution over the deal’s implementation and the possibility of renewed volatility.
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