It is a big move in crude prices. Brent Crude Futures slumped almost 5% in early Asian trade and are now trading below the psychologically important levels of $85/bbl. This is the lowest level that crude is trading at since March 2026. Nymex Crude prices have also corrected 5% in early trade today.
The big drop in crude prices came about after the United States and Iran reached an initial agreement early Monday to open the Strait of Hormuz and further extend a shaky ceasefire in the Iran war, potentially allowing desperately needed oil and natural gas to reach the global market.
US-Iran peace deal weigh on Crude prices
As per the international news agency Reuters, details of the deal were not immediately released, and Iran signalled implementation would not start until the signing, which key mediator Pakistan said would occur Friday in Switzerland. It could provide a way to end a war that killed thousands across the Middle East, including the top leaders of Iran’s theocracy, and sparked a historic energy crisis.
US President Donald Trump unilaterally withdrew America from that accord in his first term, setting the stage for the tensions that culminated in the war. “Congratulations to all!” Trump wrote on social media as he celebrated his 80th birthday Sunday with a UFC cage match at the White House. He added, “I hereby fully authorise the toll-free opening of the Strait of Hormuz and, simultaneously herewith, authorise the immediate removal of the United States Naval blockade,” which was imposed in retaliation for Iran’s grip on the crucial waterway.
Oil and gas supplies could take months to return to normal
However, experts were quick to point out that oil and gas supplies could take months to return to normal after the Iran deal. They highlighted that high oil and gasoline prices and energy supply problems won’t be solved overnight, despite an agreement to end the Iran war and open the Strait of Hormuz announced Sunday.
Most industry observers believe that it will take months before energy companies can resume operations to the point of meeting the world’s demand. According to them, the slow pace of the process of shipping and refining crude oil, and doubts about the security of travelling through the strait, mean the effect won’t be seen immediately, they said.
“It’s going to take time for people to feel comfortable and for insurance to be in place… particularly to get people on the ground to restart some of these assets,” said Daniel Evans, global head of fuels and refining research at S&P Global Energy.
“To bring a ship in, you need to be confident that you’ve got a big enough window of safety to bring it in, load it and move it out,” he added.
Oil tankers also move slowly, he explained. It takes months to travel from the strait to distant countries, deliver the crude oil to a refinery for processing and then arrive at its final destination.