Oil prices fell sharply on Monday while global equities rallied after the United States and Iran announced a deal to end their conflict and reopen the Strait of Hormuz, easing fears of supply disruptions.
The two countries confirmed the agreement following a mediation effort by Pakistan, with a formal signing ceremony expected in Switzerland on June 19. The deal is aimed at ending a three-month conflict that had previously driven up energy prices and raised inflation concerns worldwide.
The Strait of Hormuz — a key shipping route for about 20% of global crude oil — had been effectively closed after the escalation of tensions involving US-Israel strikes on Iran.
“The Deal with the Islamic Republic of Iran is now complete,” US President Donald Trump wrote on social media on Sunday, adding that he had authorised the reopening of the waterway and calling for the resumption of global oil shipments.
Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed that the agreement brings an “immediate end” to hostilities, with further negotiations expected within two months for a final settlement.
Following the announcement, crude oil prices dropped by as much as five percent, with West Texas Intermediate falling to around $83 per barrel. Prices have eased significantly from earlier peaks above $110 during the height of the conflict.
The decline in oil prices eased inflation concerns and reduced expectations of further interest rate hikes by major central banks, including the US Federal Reserve.
Analysts said the development supported broader risk appetite in global markets, with equities rallying across Asia, Europe, and the United States.
Asian markets led gains, with major indexes in Tokyo and Seoul rising sharply, while Shanghai, Sydney, Singapore, and Taipei also posted gains. European markets opened higher, reflecting improved investor sentiment.
Jakarta recorded one of the strongest performances, rising more than four percent as lower energy costs supported the local currency, which also strengthened against the US dollar.
Traders are now watching for further developments, including the formal signing ceremony in Switzerland and whether the agreement holds amid lingering geopolitical uncertainties.
AFP
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