Oil benchmarks slid sharply in Asian trade on Monday after the United States and Iran disclosed a framework intended to end months of conflict and reopen the Strait of Hormuz to shipping.
At 20:00 ET (00:00 GMT), Brent futures for August delivery were down 4.1% at $83.79 per barrel, while West Texas Intermediate (WTI) crude futures fell 4.6% to $80.95 per barrel. The moves deepened last weeks declines and left both contracts at their weakest levels since March 10.
U.S. President Donald Trump and Iranian officials announced the framework on Sunday. The outline is expected to be formalized with a signing by Friday this week.
"Ships of the World, start your engines. Let the oil flow!" Trump said in a social media post.
Draft terms of the accord reportedly include measures such as sanctions relief, restrictions on Irans nuclear activities, and steps to normalize Iranian oil exports. Market participants interpreted those provisions as increasing the likelihood that more Iranian barrels could reach global markets later in the year, adding immediate downward pressure on prices.
The reopening of the Strait of Hormuz has become the primary focus for traders. The waterway handles roughly a fifth of global oil and fuel consumption, and its closure or disruption earlier in the conflict heightened supply concerns.
When the crisis was at its peak, shipping interruptions, higher insurance premiums and the risk of prolonged shortages helped push Brent crude above $120 per barrel. The prospect of restored tanker traffic and resumed exports is therefore a key factor behind the recent price declines.
Despite the markets relief at the prospect of reduced geopolitical risk, analysts cautioned that significant uncertainties persist. The ceasefire framework still requires formal implementation, and even if the Strait of Hormuz reopens in full, tanker throughput may not immediately return to pre-conflict levels.
Investors are also tracking a heavy calendar of central bank events this week, including the U.S. Federal Reserves policy meeting, which could influence market positioning and demand expectations.
Summary: A U.S.-Iran framework to halt hostilities and reopen the Strait of Hormuz sent Brent and WTI down more than 4% in Asian trade, driven by expectations of increased supply from Iran and eased shipping risks. Prices reached their lowest point since March 10, while analysts warn implementation and operational hurdles remain.