Oil Drops 4% as US-Iran Ceasefire Raises Hopes for Hormuz Reopening

Oil prices fell sharply after the US and Iran reached an interim agreement to end their four-month conflict, paving the way for the reopening of the Strait of Hormuz, a route that normally carries around 20% of global oil shipments.

Brent crude dropped more than 4% to below $84 per barrel, while WTI fell nearly 5% to around $81, as traders priced in the return of disrupted oil supplies. The deal includes a 60-day ceasefire and plans to restart energy exports through the strategic waterway.

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Despite the market optimism, analysts warned that significant challenges remain, including mine clearance operations, higher shipping insurance costs, and the gradual restart of oil production. Brent’s prompt spread has narrowed from over $12 in April to less than $1, reflecting easing supply concerns.

Meanwhile, US stock futures rallied on the news, with Nasdaq futures up 1.9%, S&P 500 futures rising 1.2%, and Dow futures gaining 1%. Gold climbed as much as 2.7% to above $4,330 per ounce following the announcement.

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