Oil prices drop after Trump announces US-Iran peace deal
By Victor Idajili
Oil prices fell sharply on Sunday after US President Donald Trump said Washington and Tehran had reached a peace agreement, easing fears of prolonged supply disruptions.
Brent crude slid 3.9% to about $84 per barrel, while US crude dropped 4.8% to around $81. If those levels hold at close, it would mark the lowest settlement since March 4 — just after the conflict began. Prices had already been softening, breaking below $90 on Friday for the first time since the war’s opening week. Still, crude remains well above pre-conflict levels from late February, before US and Israeli strikes on Iran.
Trump posted on social media Sunday that the deal “is now complete.” Iranian officials confirmed a memorandum of agreement is finalized and set to be formally signed in Switzerland on Friday. Both sides said the naval blockade on Iranian ports would be lifted. Trump added he authorized “the toll free opening of the Strait of Hormuz” and plans to remove mines from the waterway, where Iranian lawmakers say ships have been paying about $2m per passage.
Investors responded positively. Dow futures rose 0.6%, while S&P 500 and Nasdaq futures gained over 0.7%.
But analysts warn the road to normal oil flows is long. The Strait of Hormuz still needs to be cleared, shipping must resume without restrictions, Middle East production facilities need to restart, emergency reserves have to be refilled, and damaged energy infrastructure must be repaired. Many oil wells were shut during the conflict and could take weeks to ramp up. Some may not hit pre-war output.
Despite the drop, experts don’t expect cheap oil anytime soon. Stronger demand and efforts to rebuild emergency stockpiles could push prices back up.
“I’m very concerned we could see oil prices skyrocket later this summer with crude oil prices heading well into the mid- to high-$100 range, and gasoline pump prices heading back to all-time highs around $5 a gallon,” one analyst said.
Skepticism also surrounds the Strait of Hormuz reopening. “It’s great if it happens but I’ll believe it when I see actual ships making the free and unhindered passage through the strait,” said Joe McMonigle, president of the Global Center for Energy Analysis, based in Saudi Arabia.
US gasoline averaged $4.07 per gallon Sunday, per AAA. That’s down for three weeks straight, but still 36.6% higher than before the conflict started.
For now, the peace deal has cooled oil markets. Whether prices stay down will depend on how quickly mines are cleared, tankers move freely, and wells come back online.
