Crude oil prices sank to their lowest levels in months following President Trump’s announcement of an agreement with Iran to reopen the Strait of Hormuz.
Brent crude oil prices dropped 4.8% Monday to $83.17 a barrel, while West Texas Intermediate crude plunged 5.2% to $80.46 a barrel. US oil had briefly dropped below the $80 mark for the first time since March in early trading.
Though still higher than pre-war prices, the crude benchmarks fell to three-month lows after earlier hitting as high as $126 a barrel during the Middle East conflict.
In a Sunday post on Truth Social, the president wrote: “The Deal with the Islamic Republic of Iran is now complete.”
“Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!”
The strait – a vital maritime route in the Persian Gulf for 20% of the world’s oil supplies – was slated to reopen Friday when a deal is signed in Switzerland, according to officials.
US stocks jumped Monday as traders hoped for a swift end to the world’s worst-ever energy supply disruption, which has raised US gasoline prices above the $4 mark and reheated inflation.
The Dow Jones Industrial Average had soared 517 points, or 1%, as of about 9:45 a.m. ET, while the S&P 500 and Nasdaq rose 1.5% and 2.4%, respectively.
National average gasoline prices came to $4.07 a gallon Monday – a 10% decrease from a month ago, though still roughly 36% higher than pre-war prices, according to AAA.
Gasoline prices typically lag behind oil benchmarks by one to two weeks, and the Trump administration has insisted the cost of gas will come down quickly once traffic through the strait is fully resumed.
But analysts have warned that it could take months for global supplies to normalize, especially in the wake of damage to Middle Eastern energy facilities. Oil executives have also sounded the alarm over dwindling energy stockpiles.
“Within two weeks, if it stays open and the deal looks stable, we can expect the national average to drop to mid-high $3 range,” Joe Adamski, managing director of ProcureAbility, a supply chain consultancy, told The Post.
“But the rest will take much longer. It will take up to six months for tanker traffic flows to reach normal; demining and facility repairs will take anywhere from six months to two years, that we don’t know until full assessments can be done.”
Pakistan’s Prime Minister Shehbaz Sharif announced the peace deal in a post on X.
“Both sides have declared the immediate and permanent termination of military operations on all fronts,” he wrote.
Vice President JD Vance said Monday the US and Iran have “already signed” a peace agreement ending their three-and-a-half month-long war, though the text has not yet been released.
The signing of the deal is expected to launch a 60-day negotiating process to determine the fate of Iran’s nuclear program and the extent of sanctions relief, officials said.
According to details released by Iran, the nation has agreed to not build a nuclear weapon and to reopen the maritime route if the US releases $25 billion in frozen assets.
