Global oil prices dropped sharply on Monday while stock markets rallied after the United States and Iran announced an agreement to end their conflict and reopen the Strait of Hormuz, easing concerns over disruptions to global energy supplies.
The breakthrough, brokered through mediation by Pakistan, is expected to be formally signed in Switzerland on June 19. The agreement aims to bring an end to a three-month conflict that had fueled fears of supply shortages and contributed to rising energy costs worldwide.
The Strait of Hormuz, a vital route that carries about 20 percent of the world’s crude oil shipments, had been effectively shut following escalating tensions involving US-Israel strikes on Iran. US President Donald Trump confirmed the deal and authorised the reopening of the waterway, while Iran’s Deputy Foreign Minister Kazem Gharibabadi said hostilities would end immediately, pending further negotiations.
Following the announcement, crude oil prices fell by as much as five percent, with West Texas Intermediate crude dropping to around $83 per barrel. The decline marked a significant retreat from prices above $110 per barrel recorded during the peak of the conflict, helping to ease global inflation concerns.
The development boosted investor confidence, triggering gains across major stock markets in Asia, Europe and the United States. Asian markets led the rally, with strong performances in Tokyo, Seoul, Shanghai, Sydney, Singapore and Taipei, while Jakarta recorded one of the biggest gains as lower energy costs strengthened both equities and the local currency.