U.S. crude oil falls nearly 5% after Trump says U.S. and Iran complete deal to open Strait of Hormuz

• U.S. crude oil futures dropped 4.8% to $80.80 per barrel, while Brent crude fell 3.9% to $83.89 per barrel following the announcement
• The Strait of Hormuz will reopen without tolls and the U.S. will immediately end its naval blockade of Iran, with an official peace deal signing scheduled for June 19 in Switzerland
• Tanker traffic through the strait had plunged in early March due to Iranian attacks, disrupting approximately 20% of global oil supplies in what became the largest oil supply disruption in history

Summary

Key Development:

U.S. crude oil prices fell nearly 5% on Sunday following President Trump's announcement that the U.S. and Iran have completed a deal to reopen the Strait of Hormuz. WTI crude futures dropped 4.8% to $80.80 per barrel, while Brent crude declined 3.9% to $83.89 per barrel by 6:01 p.m. ET.

Deal Specifics:

The agreement includes reopening the Strait of Hormuz without a toll system and immediate termination of the U.S. naval blockade of Iran. Pakistan Prime Minister Shehbaz Sharif, serving as mediator, confirmed an immediate and permanent cessation of military operations on all fronts, including Lebanon. The formal peace deal signing is scheduled for June 19 in Switzerland.

Market Context:

The Strait of Hormuz is a critical chokepoint through which approximately 20% of global oil supplies passed before tanker traffic collapsed in early March due to Iranian attacks. This disruption triggered what was described as the biggest oil supply disruption in history, making the reopening highly significant for global energy markets.

Market Implications:

The sharp price decline reflects immediate relief over restored access to a crucial oil transport route. Reopening Hormuz is expected to ease supply constraints and reduce geopolitical risk premiums in oil prices. The deal signals a major de-escalation in U.S.-Iran tensions, potentially stabilizing energy markets after months of unprecedented disruption. Technical talks and preparations for the official signing will occur this week.