U.S. President Donald Trump and Iran's deputy foreign minister announced an initial peace deal on Monday to end the war and reopen the Strait of Hormuz.
The agreement aims to reduce geopolitical risk and ease global inflation concerns by securing one of the world's most critical oil transit chokepoints.
"We have reached an agreement that will end the war and reopen the Strait of Hormuz," President Trump said [1].
Following the announcement, crude oil prices fell to their lowest levels since March 2024 [3]. West Texas Intermediate (WTI) crude prices declined by 4.68% [2] to reach $80.91 per barrel [2]. Brent crude prices dropped by 3.95% [2] to $83.88 per barrel [2].
Market analysts said oil prices slipped approximately 4% [1] as the prospect of reopened trade routes reduced the risk premium typically associated with Middle East tensions. A CNBC TV18 anchor said oil prices were down more than 4% after the peace deal [2].
While oil prices declined, the precious metals market saw a different trend. Spot gold prices rose to $4,297.42 per ounce [2].
The deal comes after a period of volatility where lack of progress in negotiations had previously caused oil prices to rally. The current agreement represents a shift toward stability in the region, a move that global markets reacted to with an immediate reduction in energy costs.
“"We have reached an agreement that will end the war and reopen the Strait of Hormuz,"”
The reopening of the Strait of Hormuz removes a primary systemic risk for global energy supplies. By lowering the geopolitical tension between the U.S. and Iran, the deal reduces the 'fear premium' embedded in oil prices, which may contribute to lower fuel costs and a deceleration of inflation in energy-dependent economies.
