Oil plummets following preliminary US-Iran peace deal
Brent crude’s price has fallen sharply after US President Donald Trump declared a preliminary peace deal with Iran yesterday.
IMAGE: The Strait of Hormuz. Getty Images
The deal guarantees a swift and “toll free” reopening of the Strait of Hormuz to commercial vessel traffic, following over 100 days of closure.
Trump also announced an immediate removal of the US naval blockade of the region. “Ships of the World, start your engines. Let the oil flow!” Trump wrote on social media platform Truth Social.
The final text of the agreement has yet to be released, and a formal signing ceremony is expected to take place in Switzerland on Friday.
“Pending its finalization… all details will be shared with the public in due course,” Iranian Foreign Minister Seyed Abbas Araghchi said on social media platform X.
Specifics of the deal are yet to be finalised, including a comprehensive framework to end the war in Lebanon, suspend sanctions on Iranian crude oil, unfreeze Iranian assets, and a commitment from Tehran to forgo nuclear weapons production.
Meanwhile, the diplomatic efforts faced a small setback after the Israel Defense Forces (IDF) struck a command center in Dahieh, Beirut, yesterday.
“The command center was used by Hezbollah terrorists… against Israeli civilians & IDF soldiers operating in southern Lebanon,” the IDF claimed in a statement.
While the preliminary deal represents a major diplomatic turning point in the war to date, market uncertainty is expected to continue as the durability of the peace and the path back to normalcy remain unclear.
“Any delay in mine clearance, any Israeli escalation, any Iranian walk back, or any dispute over sequencing can put a bid back into the barrel,” SPI Asset Management managing partner Stephen Innes said.
Oil traders will look out for tangible recovery, like the clearing of naval mines and the resumption of normal shipping flows.
“The market will now demand proof. It will watch whether Iran formally signs. It will monitor whether the Swiss ceremony takes place on Friday, 19 June,” Innes added.
By Aparupa Mazumder
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