LONDON, Jun 18 (V7N) – Global crude oil prices fell by more than $1 per barrel on Thursday following the signing of an interim peace agreement between the United States and Iran, easing fears of supply disruptions in the Middle East.
The agreement has raised expectations of reduced regional tensions, potential reopening of the Strait of Hormuz, and a possible easing of U.S. sanctions on Iranian oil exports—factors that could significantly boost global oil supply.
Brent crude dropped $1.64, or 2.06 percent, to $77.91 per barrel, while U.S. West Texas Intermediate (WTI) declined $1.80, or 2.34 percent, to $74.99 per barrel.
Market volatility had earlier pushed prices slightly higher on Wednesday after U.S. President Donald Trump warned Iran of possible renewed military action if it failed to comply with diplomatic expectations. However, sentiment reversed sharply after reports of a new U.S.–Iran agreement emerged, stabilizing investor expectations.
The 14-point interim framework reportedly aims to pave the way for a comprehensive agreement within 60 days. It includes provisions allowing toll-free shipping through the Strait of Hormuz during the negotiation period, although key issues such as Iran’s nuclear program remain outside the scope of the initial deal.
Analysts say that while the reopening of the Strait of Hormuz could ease some supply concerns, a significant drop in oil prices is unlikely in the short term due to ongoing geopolitical uncertainties and the time required for markets to adjust.
The International Energy Agency (IEA) warned that if the agreement is fully implemented and maritime flows normalize, global oil markets could eventually shift toward oversupply by 2027, potentially reshaping long-term energy price dynamics.
Despite the short-term decline, traders remain cautious, noting that the durability of the agreement and regional stability will be key factors influencing future price movements.
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