Oil prices fell sharply in early Asian trading on Monday after reports suggested that a deal to reopen the Strait of Hormuz had entered its final stages. The development triggered immediate market reactions as traders responded to expectations of improved supply flows.
At the time of reporting, both major crude benchmarks had dropped by more than 5%. Brent crude slipped below the $100 mark to $98.27, while West Texas Intermediate (WTI) declined to $91.63, reflecting renewed optimism in global energy markets.
Market Reacts to Diplomatic Signals
However, uncertainty continued to shape investor sentiment. On Sunday, former US President Donald Trump posted on social media that he had instructed his representatives not to rush into any agreement. In addition, a senior US administration official confirmed that while negotiations had progressed, no deal would be signed immediately.
The proposed agreement aims to reopen the Strait of Hormuz, end ongoing conflict, and require Iran to reduce its enriched uranium stockpile. Moreover, the initial phase reportedly includes a 60-day ceasefire extension during which maritime traffic would resume through the strategic waterway while nuclear talks continue.
Energy Flows and Regional Stability at Stake
According to Iran’s Tasnim news agency, vessel movement through the Strait could return to pre-war levels within 30 days if the agreement is finalized. Meanwhile, the deal also reportedly includes provisions to end hostilities involving Israel and Hezbollah, although Israeli Prime Minister Benjamin Netanyahu stressed that any final settlement must fully eliminate nuclear threats.
In contrast, Iranian Foreign Ministry spokesperson Esmail Baghaei stated that while a memorandum of understanding is close to completion, nuclear details are not yet being discussed at this stage.
Ultimately, although a potential agreement could ease pressure on global oil markets, analysts caution that full recovery of energy flows and infrastructure will depend on long-term geopolitical stability and enforceable guarantees for uninterrupted transit through the Strait.
