Oil Drops Under $80 As US-Iran Peace Deal Boosts Optimism

Juliet Oladele, Reporting 

OIL prices have fallen to a three-month low following optimism over the expected reopening of the Strait of Hormuz after a peace deal between the United States and Iran.

Brent North Sea crude, the international benchmark, dropped 3.8 per cent to $79.99 a barrel on Tuesday, dipping under $80 for the first time since early March.

The main US oil contract, West Texas Intermediate, slid 3.9 per cent to $77.61 a barrel.

Market Reaction

The declines come as traders price in the prospect of increased oil supply following the historic agreement between Washington and Tehran, which is set to end more than three months of warfare that had disrupted shipping through the strategic waterway.

The Strait of Hormuz, through which approximately 20 per cent of global oil passes, had been blockaded by Iran after the United States and Israel launched their war against the country on February 28. The United States subsequently blocked shipping to and from Iranian ports.

Deal Progress

President Donald Trump confirmed on Monday that ships were again moving through the strait and that it would be “completely open” by Friday, when a formal signing ceremony is scheduled to take place in Switzerland.

Iranian media reported that three oil tankers and two cargo ships had already passed through the area.

A senior US administration official disclosed that Trump, Vice President JD Vance, and Iran’s parliamentary speaker Mohammad Bagher Ghalibaf had already signed the text electronically.

Investor Outlook

The drop below $80 marks a significant milestone for oil markets, which had been under pressure since the conflict began. However, industry watchers have cautioned that market conditions will likely remain tight for several weeks or months as supply chains gradually normalise.

Fresh data from the US Department of Energy showed strategic oil stockpiles sank last week to their lowest level since 1983, highlighting the scale of the supply challenges that remain.

Shipping groups also warned on Monday that it was too soon to safely resume sailing through the strait, suggesting that the full restoration of normal oil flows may take time.