Oil prices tumbled and global stock markets rallied on Monday after the United States and Iran announced a framework agreement aimed at ending months of conflict and restoring access to the strategically important Strait of Hormuz.
Brent crude, the international benchmark for oil prices, fell 4.7% to $83.24 per barrel as investors reacted positively to the prospect of renewed stability in global energy markets. Equity markets across Asia and Europe also posted strong gains following the announcement.
US President Donald Trump welcomed the breakthrough, saying the agreement would pave the way for the reopening of the Strait of Hormuz, a vital shipping corridor that handles roughly one-fifth of the world’s oil and liquefied natural gas (LNG) supplies. In a social media post, Trump declared, “Let the oil flow!”
Pakistan, which has played a key mediating role in the negotiations, said an official signing ceremony is scheduled for June 19 in Switzerland. Iran’s Deputy Foreign Minister, Kazem Gharibabadi, also confirmed on state television that a deal had been finalised between the two countries.
Despite the optimism, analysts cautioned that uncertainty remains due to the limited details released about the agreement.
Vandana Hari, founder of energy market consultancy Vanda Insights, said the lack of clarity surrounding the terms of the deal could keep markets volatile in the coming days.
The Strait of Hormuz has been largely inaccessible since shortly after US and Israeli airstrikes on Iran on February 28. During the conflict, Tehran threatened vessels using the waterway, disrupting one of the world’s most important energy transit routes and pushing oil prices sharply higher.
Before the conflict, Brent crude traded at around $70 per barrel but surged to nearly $120 at the height of the crisis amid fears of prolonged supply disruptions.
Asian markets reacted strongly to the news. Japan’s Nikkei 225 index rose 5%, while South Korea’s Kospi gained 5.2% as investors welcomed the possibility of lower energy costs. The region has been particularly vulnerable to rising oil and LNG prices due to its dependence on Middle Eastern energy imports.
European markets also advanced, with Germany’s DAX and France’s CAC 40 both gaining about 1.7%. In London, the FTSE 100 rose 0.6%.
However, industry experts warned that the resumption of normal shipping operations through the Strait of Hormuz could take weeks or even months.
Andrew Lipow, president of Lipow Oil Associates, noted that mines would need to be cleared from the waterway before traffic could fully resume. He estimated the process could take anywhere from several weeks to six months. In addition, a backlog of oil tankers waiting to transit the strait and efforts to restore production and loading operations are expected to delay a return to normal supply levels.
Retired US Navy Rear Admiral Mark Montgomery echoed those concerns, saying the energy market should not expect an immediate recovery.
According to Montgomery, it could take between one and one-and-a-half months before oil flows and shipping movements return to pre-conflict conditions.
