Oil prices have fallen following the announcement of a peace deal between the US and Iran, with the Strait of Hormuz set to reopen. In early Asian trade, Brent crude fell 3.8% to $84.02 (£62.48) a barrel, while US-traded oil dropped 4.1% to $81.40.
Peace Deal Details
Pakistan confirmed the agreement will be officially signed on Friday in Switzerland. Specific points are yet to be confirmed, but Iranian state media detailed a draft 14-point memorandum of understanding. This includes lifting the US naval blockade within 30 days and reopening the Strait of Hormuz within 30 days under Iranian arrangements.
The strait had been effectively closed since the US and Israel launched airstrikes on Iran on February 28. It handles roughly 20% of the world's oil and gas supplies.
Trump's Reaction
President Donald Trump posted on Truth Social, claiming success where others failed. He wrote: "This Great Deal will bring Peace and Security to the whole Region. Many presidents have tried to make Peace with Iran, and all have failed before me." He emphasized that "oil will flow" again, and said the Strait of Hormuz will be "permanently toll free".
Market Outlook
Despite the deal, investment bank JP Morgan predicted global oil prices will likely remain in the "low $100s" for much of this year, even after the Strait reopens. Supplies are not expected to return to normal quickly. In May, the average price of unleaded petrol rose to 158.52p a litre, according to the RAC.
