Oil prices fell sharply on Sunday after US President Donald Trump said a deal with Iran had been completed and announced the immediate reopening of the Strait of Hormuz, a critical route for global energy shipments. Brent crude dropped 3.9% to about $84 a barrel, while US crude fell 4.8% to around $81 a barrel, extending losses from Friday.
The Strait of Hormuz, one of the world’s most important oil transit chokepoints, had effectively remained closed since fighting began in late February. The disruption had raised fears of a major supply shock, with analysts warning that prolonged closure could push oil prices into the mid-to-high $100 range. Some market observers also said petrol prices in the United States could have reached record highs if the route had stayed shut. Rapidan Energy President Bob McNally said fuel prices could have climbed to as much as $5 a gallon without a deal.
Trump announced the breakthrough on Truth Social, saying the agreement with Tehran was complete and that restrictions on maritime traffic would be removed immediately. He also said the US Naval blockade would be lifted. In his post, Trump wrote that ships should resume operations and allow oil to flow again.
The announcement came hours before a UFC event at the White House marking Trump’s 80th birthday.
The development followed several days of diplomatic activity involving multiple mediators, including Pakistan. Pakistani Prime Minister Shehbaz Sharif said a peace agreement had been reached after intensive negotiations between Washington and Tehran. Sharif said both sides had agreed to an immediate and permanent end to military operations on all fronts, including in Lebanon.
According to Sharif, the agreement is expected to be formally signed in Switzerland on June 19. In a post on X, he said the deal marked the end of military operations and reflected the success of extensive talks between the two sides.
The market reaction was immediate, as traders responded to the prospect of restored oil flows through the strait. The sharp drop in crude prices reflected easing concerns about supply disruption in a region that plays a central role in global energy markets. For investors and consumers alike, the reopening of the waterway could help stabilize fuel costs after weeks of volatility driven by the conflict.
Iranian lawmaker sources had previously said some commercial vessels were paying about $2 million on average to transit the waterway during the closure, underscoring the cost of the disruption. With the announcement of a deal and the resumption of shipping, attention now turns to whether the agreement will hold and whether maritime traffic through the strait can return to normal without further interruption.
