US-Iran Peace Deal Sends Oil Below $85, Dollar Slips

The US and Iran agreed to reopen the Strait of Hormuz, ending a four-month war that killed thousands and disrupted global energy flows. President Donald Trump announced the deal on social media Sunday, authorizing the removal of the US naval blockade. Iranian state media framed the agreement as a US capitulation.

Oil prices dropped sharply. Brent crude fell more than 3% toward $84 a barrel, after closing last week at the lowest in more than three months. West Texas Intermediate traded near $81. The dollar slipped against Group-of-10 peers in early Asia trading. The risk-sensitive Australian dollar led gains, rising about 0.5%. The euro strengthened 0.3% against the greenback.

Neither side released the full text of the deal. Iran's Deputy Foreign Minister Kazem Gharibabadi said on state television that the memorandum of understanding will be published after the official signing, scheduled for June 19. The broad terms had circulated for days. The US and Iran will end their competing blockades of the strait, one of the world's busiest waterways. They agreed not to attack each other and to start negotiations on Iran's nuclear program. Iran would get relief from sanctions targeting its overseas oil sales.

Both sides claimed victory. Deep distrust remains. Grave questions hang over their ability to reach a broader deal. The view from Israel is unclear. Prime Minister Benjamin Netanyahu's government jeopardized a signing at the last minute with new attacks on Lebanon. Trump may face severe blowback from Iran hawks at home. They worry he is punting on the issues that were the reasons he began the war in the first place: Iran's nuclear capability and its ballistic-missile program.