Global oil prices have tumbled to a three-month low and stock markets have closed at a record high amid fresh hopes that a US-Iran peace deal could end the greatest energy supply crisis in the history of the market. The price of Brent crude dropped about 4 per cent to roughly $83 (£62) a barrel on Monday, with wholesale gas prices falling 6 per cent in Europe.
Stock markets on Wall Street rallied, with the Dow rising by about 1 per cent to hit a record high as investors welcomed the news that Washington and Tehran had reached a preliminary agreement. The Russell 2000 index of small US companies also hit a new high, rising about 0.8 per cent.
Donald Trump announced on Sunday that a deal was 'now complete', writing on social media: 'I hereby fully authorize the toll free opening of the Strait of Hormuz... Let the oil flow!' However, many details remain unclear, including the exact timing of the reopening and who will oversee safe passage. Iranian authorities have said there would be a 60-day negotiating period for a final deal.
The benchmark international oil price extended its fall from $93 a barrel on Thursday to just over $82 a barrel, its lowest since the early days of the Iran war. In Europe, the UK's FTSE 100 opened up 0.8 per cent before easing, while shares in oil companies such as BP and Shell fell sharply. In Asia, Japan’s Nikkei index and South Korea’s Kospi jumped by 5 per cent.
Trump also claimed that the US military had been secretly helping to move millions of barrels of oil a day through the strait in recent weeks to ease market pressure. Gulf oil exports through the strait have been halted since early March, erasing 20m barrels a day from the market. There are still 38 Japanese-linked vessels stranded in the channel.
A record level of emergency crude and fuel has been released by members of the International Energy Agency at a rate of about 2.5m barrels a day. China has also cut its oil imports by an estimated 4m barrels a day, drawing on its record high inventories and halting its aggressive stockpiling.
