Oil prices down more than 4 per cent after US-Iran deal to open Hormuz

Oil prices plunged more than four per cent Monday after the United States and Iran announced they had reached a peace agreement to end months of a war that had roiled energy markets.

West Texas Intermediate was down 4.39 per cent at $81.15 a barrel in Tokyo after mediator Pakistan said the United States and Iran agreed to a peace deal and an “immediate and permanent” end to military operations on all fronts, including Lebanon.

“The Deal with the Islamic Republic of Iran is now complete,” US President Donald Trump swiftly confirmed with his own statement on Sunday.

Trump also announced that the strategic Strait of Hormuz—a vital maritime chokepoint through which roughly 20 per cent of the world’s crude oil supply transits—would reopen.

“I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!”

Soon after, Iran said that the newly announced agreement with the United States put an “immediate end” to the countries’ war.

“This is a first step deal, not a final peace settlement,” Stephen Innes of SPI Asset Management said.

“The market will now trade verification,” he said including the official signing in Switzerland, mine clearance and Israeli restraint.

“It is a marketable ceasefire framework that kicks the hard problems down the road. Iranian compliance, and Hezbollah quiet.”