‘LET THE OIL FLOW’: Crude prices plunge after Trump announces Iran deal, Hormuz reopening

CALGARY — Oil prices dropped to a three-month low on Monday morning following the announcement by the United States and Iran that they had reached a deal to end the Middle East conflict.Global markets soared after the announcement, but oil prices fell more than $4 a barrel following news that oil tanker traffic would resume through the Strait of Hormuz..“I hereby fully authorize the toll-free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the US naval blockade,” US President Donald Trump posted Sunday on Truth Social.“Ships of the World, start your engines. Let the oil flow!”Brent crude fell $4.39 (5%) to $82.94 a barrel by Monday morning, while U.S. West Texas Intermediate (WTI) dropped $4.62 (5.4%) to $80.26 a barrel — their lowest levels since March 10.Reuters reported that the US and Iran are expected to sign a memorandum of understanding (MOU) in Switzerland on June 19, a development confirmed Sunday by Pakistan Prime Minister Shehbaz Sharif, whose country is serving as a mediator in the negotiations..“We would like to thank the United States of America and the Islamic Republic of Iran for their commitment to finding a diplomatic solution to the conflict,” Sharif said on X.“With the agreement now in place, mediators will facilitate a series of meetings this week. These pre-implementation discussions will lay the foundation for the technical talks and the official signing ceremony.”Kazem Gharibabadi, Iran’s deputy foreign minister, has said a broader agreement would be negotiated during a 60-day ceasefire period.Trump has also stated that the Strait of Hormuz will be open “toll free” and that the US naval blockade of Iranian ports will end more than 100 days after the closure of the Strait.However, Iranian state media Mehr has reported the MOU stipulates that the Strait’s reopening will be carried out under “Iranian arrangements.” Iran has recently been charging tolls of up to $2-million per vessel for “safe passage” through the Strait.On Monday morning, the first tanker carrying energy products — an LNG carrier — cleared the chokepoint on its way to India.According to ship-tracking data from MarineTraffic, the tanker, named Disha, passed through Hormuz and is currently located in the Gulf of Oman..US permitting Iranian tankers through Strait of Hormuz to keep oil markets supplied.While the tentative agreement between the US and Iran could ease traffic congestion and allow more tankers into the region to pick up cargo, investors remain cautious about how quickly Middle Eastern producers can restore oil production and exports following months of disruption.The closure of the Strait of Hormuz — a chokepoint for roughly one-fifth of the world’s oil and liquefied natural gas supplies — removed millions of barrels of supply from global markets over the past three months.“The damage already done cannot be reversed overnight,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.“This includes not only any physical damage to oil infrastructure but also the economic strain endured by oil-importing economies that have faced elevated energy costs for months.”Tamas Varga, an analyst at PVM Oil Associates, also cautioned that it would “take time” for volumes moving through the Strait to return to the pre-war level of roughly 20 million barrels per day.“Estimates of the full resumption of traffic vary from weeks to months,” Varga said.“Financial investors are, therefore, merely borrowing future physical supply, hence the current cheapening of oil prices. The slow resumption will possibly result in a supply deficit throughout 2026.”

‘LET THE OIL FLOW’: Crude prices plunge after Trump announces Iran deal, Hormuz reopening

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