Global oil prices have tumbled to a three-month low and stock markets closed at a record high amid fresh hopes that a US-Iran peace deal could end the greatest energy supply crisis in history. The price of Brent crude dropped about 4% to around $83 (£62) per barrel on Monday as optimism grew that the Strait of Hormuz could reopen soon, restoring Gulf oil exports. Wholesale gas prices in Europe also fell by 6%.
Wall Street rallied, with the Dow Jones rising about 1% to a record high, while the Russell 2000 index of small US companies also hit a new high. In Europe, the UK's FTSE 100 opened up 0.8% before easing, and France's CAC 40 and Germany's DAX rose just over 1%. Shares in oil companies like BP and Shell fell sharply. In Asia, Japan's Nikkei and South Korea's Kospi surged 5%, and China's CSI 300 rose 1.9%.
US President Donald Trump announced on social media: 'I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!' He later clarified the strait would open after a peace deal is signed on Friday. Many details remain unclear, including the exact timing of reopening and oversight of safe passage. Iranian authorities have indicated a 60-day negotiating period for a final deal covering broader issues.
The oil price began falling late last week from $93 a barrel on Thursday to close at $87.50 on Friday after Trump said he was close to a deal with Tehran. The benchmark international price extended falls to just over $82 a barrel, its lowest since early March. Trump also claimed the US military had been secretly helping move millions of barrels of oil daily through the strait in recent weeks to ease global market pressure.
Gulf producers have rerouted about 5 million barrels of oil a day via pipelines, while a further 2 million barrels may have been moved via 'dark tankers' with US military help. However, 38 Japanese-linked vessels remain stranded in the Strait of Hormuz, according to the Japanese Shipowners' Association. The International Energy Agency has released a record level of emergency crude and fuel at about 2.5 million barrels a day, while China has reduced imports by about 4 million barrels a day, drawing on its high inventories.
