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Crude Oil Plunges 5% After Trump's Iran Peace Deal
Brent crude fell 4.7% and WTI 5.2% after Trump's Iran deal reopened the Strait of Hormuz. The real supply impact may take weeks, traders said.
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Crude oil futures fell more than 4% Monday morning after President Donald Trump said the U.S. had reached a peace deal with Iran and would remove the naval blockade on the Strait of Hormuz. Brent crude settled near $83.25 a barrel, down 4.7%. WTI crude slid 5.2% to $80.51.
Trump announced the deal in a Truth Social post, authorizing the "toll free opening" of the Strait and the removal of the blockade. "Ships of the World, start your engines. Let the oil flow!" he wrote. Iran's Deputy Foreign Minister Kazem Gharibabadi said a more expansive peace agreement would be negotiated during a 60-day ceasefire period, according to Reuters.
The market reaction is straightforward: the risk premium that had built into crude prices over recent months – the possibility of a conflict that could shut the Strait – evaporated in a morning. For traders who had been long oil on geopolitical tension, the unwind hurt. A more cautious read is that the real supply impact will take weeks to materialize.