Oil Prices Plummet as Trump Announces Iran Deal Completion and Strait of Hormuz Reopening

Oil prices fell to their lowest levels since March on Monday after US President Donald Trump declared the Iran deal "complete" and announced the "immediate toll-free reopening of the Strait of Hormuz", easing fears over disruptions to one of the world's most important energy shipping routes.

Brent crude futures dropped $3.58, or 4.1%, to $83.75 a barrel by 0004 GMT, while US West Texas Intermediate (WTI) crude fell $4.01, or 4.72%, to $80.87 a barrel. Both benchmark contracts had already declined more than 3% on Friday.

The sharp fall came after signs of a possible breakthrough in the Iran crisis and expectations that oil supplies moving through the Strait of Hormuz would return to normal. The Strait of Hormuz, a crucial corridor for global oil trade, has effectively remained closed since the conflict erupted in late February. According to an Iranian lawmaker, some commercial vessels had been paying an average of about $2 million to transit the waterway.

Analysts had warned that continued disruption in the strait could drive oil prices into the mid-to-high $100 range and push petrol prices in the United States to record levels. Rapidan Energy President Bob McNally told ABC's This Week that fuel prices could have risen to as much as $5 a gallon without an agreement.

Trump announced the breakthrough on Truth Social, saying the agreement with Tehran had been finalised and authorising the removal of restrictions on maritime traffic. “The Deal with the Islamic Republic of Iran is now complete,” Trump wrote. “Congratulations to all! I hereby fully authorise the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorise the immediate removal of the United States Naval blockade,” he said. The president added, “Ships of the World, start your engines. Let the oil flow!”

Trump's announcement came hours before a UFC event at the White House marking his 80th birthday. The development followed days of diplomatic efforts involving several mediators, including Pakistan. 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 the immediate and permanent cessation of military operations, including in Lebanon, and that the agreement would be formally signed in Switzerland on June 19.

In a post on X, Sharif stated, “Following intensive talks, we are pleased to announce that the Peace Deal between the United States of America and the Islamic Republic of Iran has been REACHED. Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon.”