Oil prices fell sharply while stock markets advanced after the United States and Iran announced a framework agreement aimed at ending months of conflict and reopening the strategic Strait of Hormuz, a key artery for global energy supplies.
Brent crude, the international oil benchmark, dropped more than five per cent to $82.84 (Sh10,736) per barrel following news of the deal, extending losses after tumbling nearly five per cent in the previous trading session.
By early Tuesday, oil prices remained below $84 (Sh10,884) per barrel as investors awaited further details of the agreement.
The proposed accord is expected to be formally signed in Switzerland on Friday, June 19, according to Pakistan, which has been mediating negotiations between Washington and Tehran.
US President Donald Trump indicated that the free flow of oil from the Persian Gulf would resume once the agreement takes effect.
Notably, the announcement, made on Sunday evening, has brought relief to energy markets rattled for months by fears of supply disruptions.
The Strait of Hormuz, through which roughly 20 per cent of the world’s oil and liquefied natural gas shipments normally pass, has been effectively closed since shortly after US and Israeli airstrikes on Iran on February 28.
Following the conflict, Iran had threatened to target vessels using the waterway, raising concerns about a prolonged interruption to global energy supplies and pushing oil prices sharply higher.
Before the conflict began, Brent crude had been trading at around $70 (Sh9,071) per barrel.
Prices later surged to nearly $120 (Sh15,550) at the height of the crisis as traders reacted to escalating tensions in the Middle East.
Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed on state television that an agreement with the United States had been finalised, while Trump posted on social media, “let the oil flow!”
However, uncertainty remains about the contents of the deal, as neither Washington nor Tehran has released the memorandum of understanding.
Vandana Hari, founder of energy markets analysis firm Vanda Insights, cautioned that a lack of clarity could keep markets on edge.
She said the absence of details was “likely to inject unease and uncertainty into the market.”
Other analysts expect oil markets to remain volatile in the coming days as traders assess the likelihood of the Strait of Hormuz reopening and monitor developments ahead of the anticipated signing ceremony.
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