Oil prices declined sharply after the United States and Iran agreed to an interim deal that could lead to the reopening of the Strait of Hormuz. Brent crude dropped more than 4% to below $84 a barrel, while West Texas Intermediate traded near $81. President Donald Trump announced on social media that he was authorizing a "toll free opening" of the strait and ending the blockade on Iran, with the formal signing set for Friday. Iran's Deputy Foreign Minister Kazem Gharibabadi confirmed the agreement but said the full text would be released only after the signing in Switzerland.
US Vice President JD Vance said he "certainly" plans to attend the signing ceremony, and President Trump may also attend. The deal could ease a supply crunch that has disrupted global energy markets since late February, when the US and Israel launched attacks on Iran to limit its nuclear program. In response, Iran carried out strikes across the Persian Gulf and closed the Strait of Hormuz, which normally carries about 20% of the world's oil. US forces later imposed their own blockade on vessels linked to Iran.
Despite the announcement, traders remain cautious due to the lack of detailed terms and lingering risks. Mines may still be present in the strait, and insurance costs for shipping could remain high. Restarting oil production from shut-in Persian Gulf fields could take months because of technical challenges and infrastructure damage. European natural gas futures fell by as much as 5.8% on Monday, while gold and copper rose amid a weaker US dollar. Crops declined in early trading. The narrowing of Brent's prompt spread to less than $1 in backwardation reflects reduced market tension compared to April, when it exceeded $12.
Trump celebrates the Hormuz reopening while Iran's foreign ministry delays the deal's release, leaving traders in the dark. The gap between political theatre and operational clarity means Nigerian importers may face continued volatility despite falling prices. Any promise of stable supply hinges on unverified mine clearance and insurance terms not yet disclosed. For now, the market's relief is as fragile as the deal itself.
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