Oil Falls Below $80 as Markets Rally on Preliminary US-Iran Deal

Global oil prices fell sharply Monday after President Donald Trump announced a preliminary agreement with Iran that would reopen the Strait of Hormuz and end a naval blockade, easing fears of prolonged energy disruptions that have roiled markets since the conflict began in late February. Brent crude dropped more than 4 percent to trade just below $84 a barrel in early Asian sessions, extending Friday’s declines, while US futures for West Texas Intermediate slipped below $80 for the first time since March.

The move came after Trump posted on social media that the deal was “now complete,” authorizing the strait’s toll-free reopening and the immediate removal of US naval forces. He later clarified that formal signing would occur Friday in Switzerland, with oil flows resuming only after mine-clearing operations. Pakistani Prime Minister Shehbaz Sharif, who mediated the talks, said both sides had agreed to an immediate and permanent halt to military operations across all fronts, including Lebanon.

Asian equities surged on the news, with Japan’s Nikkei jumping 5.5 percent and South Korea’s Kospi rising as much as 5.7 percent. European futures pointed higher as well, while US stock futures climbed, led by a 2 percent gain in Nasdaq-tracking contracts. Energy-sensitive sectors such as airlines posted early gains, with United and Delta each rising more than 4 percent in premarket trading.

Yet the agreement leaves major questions unresolved. Iranian officials indicated a 60-day period of further negotiations would address Tehran’s nuclear program and sanctions relief, issues not covered in the current framework. Analysts noted that tanker operators remain wary given the lack of detail on oversight, safe passage guarantees, and the timeline for restoring damaged infrastructure in the Gulf. About 20 percent of global oil supplies normally transits the strait; its near-total closure since March triggered the largest supply shock in modern energy markets.

Trump’s announcement capped weeks of back-channel diplomacy conducted under the shadow of Israeli airstrikes on Beirut that had threatened to derail talks. Markets had already begun pricing in relief late last week as word of progress leaked, sending Brent down from $93. The benchmark now sits near levels last seen in early March, before the Hormuz disruption fully materialized.

While traders welcomed the de-escalation, some warned that any lasting recovery in supply would take time. Restarting shut-in facilities and convincing shippers to return could stretch into weeks, even if the formal signing proceeds as scheduled. The episode has also highlighted the fragility of global energy routes and the economic costs of prolonged regional conflict.

For now, the immediate market reaction has been relief. Oil’s slide and the broad equity rally reflect hopes that the worst of the supply squeeze may be over, though the deeper political questions deferred to the coming two months will determine whether the calm holds.