Oil drops as Trump announces peace deal with Iran

• Iran pact complete, US president says
• Hope for full Hormuz reopening
• Brent and WTI down more than 4%

Oil prices fell more than 4 percent in early Monday trading after US President Donald Trump announced a peace agreement with Iran, raising hopes for a full reopening of the Strait of Hormuz and a return to normal shipping through the strategic waterway.

Brent crude futures dropped 4 percent to $83.60 a barrel, while US West Texas Intermediate (WTI) fell more than 5 percent to $80.56 by 02:30 GMT. The benchmarks lost more than 3 percent on Friday.

“The Deal with the Islamic Republic of Iran is now complete,” Trump said in a post on social media platform Truth Social.

“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. Ships of the World, start your engines. Let the oil flow!” he said.

In a social media post on X, Pakistan’s prime minister Shehbaz Sharif said the official signing of the peace deal would take place on June 19 in Switzerland.

“Both sides have declared the immediate and permanent termination of military operations on all fronts, including in Lebanon,” he said.

The conflict began on February 28 and had lasted just over 100 days before the peace agreement was announced. Pakistan and Qatar were among the countries that helped broker the deal, which aims to restore shipping, energy flows and regional stability.

The draft deal called for restoring shipping activity in the strait to pre-blockade levels within 30 days, Iran’s Mehr news agency said, quoting Mehdi Mohammadi, a strategic adviser to the head of Iran’s negotiating team.

Oil flows through the strait need to reach 60-70 percent of pre-war levels to return oil markets to pre-war oversupply expectations, Reuters reported, quoting Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.

The UK, France, Germany and Italy said they are prepared to lift sanctions on Tehran following the announcement of the peace deal.

In a statement the quartet said: “Iran must never acquire a nuclear weapon. We stand ready to work with the US, Iran and the IAEA [International Atomic Energy Agency] to this end. We are prepared to lift relevant sanctions in response to clear, verifiable steps by Iran on its nuclear programme.”

Spot gold rose nearly 3 percent to $4,334.47 per ounce, as of 01:22 GMT. Silver jumped more than 4 percent to $70.7 per ounce.

Gold prices have fallen about 20 percent since the Iran war started.

Saudi Arabia’s stock market rose 0.6 percent on Sunday, with mining company Maaden gaining more than 5 percent, while energy giant Aramco slipped over 1 percent.

Stock markets in Qatar, Bahrain, Oman and Kuwait rose between 0.5 and 1.6 percent.

Dubai and Abu Dhabi stock markets are closed today due to the Hijri New Year holiday.

Further reading:

• Refinery underinvestment exposed by oil crisis, Aramco exec says
• Hormuz crisis fuels Libya oil comeback
• Iraq in crisis over petrol shortage