Oil prices dropped below $80 per barrel on Tuesday following optimism that a planned US-Iran agreement could lead to the reopening of the Strait of Hormuz, reducing concerns over global oil supply disruptions.
Brent crude, the international benchmark, fell by 4 per cent to $79.87 per barrel, reaching its lowest level in three months before recovering slightly. US West Texas Intermediate (WTI) crude also declined by 4.7 per cent to below $77 per barrel.
The decline came after US President Donald Trump said the Strait of Hormuz would “completely open” once Washington and Tehran sign their peace agreement in Switzerland on Friday.
Iranian media reported that several oil tankers and cargo vessels had already passed through the strategic waterway.
Market analysts said the expected agreement has created a positive reaction across financial markets, although traders remain cautious about possible disruptions and new charges on ships using the route.
“It appears there is already a peace dividend for markets,” said Kathleen Brooks, research director at XTB.
However, analysts warned that oil markets could remain tight for weeks or months because of uncertainty surrounding supply recovery after the conflict.
The United States Energy Department also reported that the country’s strategic oil reserves fell last week to their lowest level since 1983, suggesting continued efforts to rebuild stockpiles despite easing tensions.
Meanwhile, investors are watching major central bank decisions. The US Federal Reserve is widely expected to keep interest rates unchanged, while the Bank of England is also expected to maintain its current policy.
Global stock markets showed mixed results, with European markets closing higher while Asian markets recorded mixed performances.
Key market figures:
Brent crude: $79.92 per barrel (down 3.9%)
WTI crude: $76.95 per barrel (down 4.7%)
Dow Jones: 52,062 points (up 0.8%)
S&P 500: 7,538 points (down 0.2%)
Nasdaq: 26,573 points
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