Crude oil prices declined sharply on Monday as markets reacted to reports of a breakthrough peace agreement between the United States and Iran.
The development is expected to restore oil flows through the Strait of Hormuz, a critical global energy shipping route that has remained disrupted for more than three months.
The easing of geopolitical tensions prompted traders to unwind the risk premium that had been built into oil prices during the conflict. Investors are now reassessing the outlook for global crude supplies as energy exports from the Middle East gradually resume.
US West Texas Intermediate (WTI) crude futures for July 2026 fell by 4.82% to US$80.79 per barrel. During the trading session, WTI moved within a range of US$80.28 to US$82.21.
Brent crude futures for August 2026 declined by 4.07% to US$83.78 per barrel, trading between US$83.33 and US$84.48 during the session.
Both benchmark contracts extended losses after already falling more than 3% in the previous trading session, reflecting a rapid reassessment of supply risks in global energy markets.
According to news reports, US President Donald Trump and Iran’s deputy foreign minister have reached an initial agreement aimed at ending the conflict and restoring maritime traffic through the Strait of Hormuz.
The agreement is expected to be formalised through a memorandum of understanding scheduled to be signed in Switzerland later this week.
As part of the proposed arrangement, restrictions affecting shipping activity in the region are expected to be eased, allowing energy exports to resume.
Iranian officials have indicated that the Strait of Hormuz could be reopened within 30 days under arrangements overseen by Tehran.
The route is one of the world's most important energy chokepoints and typically handles around one-fifth of global oil and liquefied natural gas shipments.
Oil prices had rallied significantly during the conflict as traders feared prolonged disruptions to global supply chains. However, the prospect of renewed exports from the region has triggered a sharp reversal.
Market analysts noted that the geopolitical premium embedded in crude oil prices is being removed as investors begin pricing in the return of oil flows through the Strait of Hormuz.
The market's focus has now shifted towards the speed at which Middle Eastern producers can restore production capacity, repair infrastructure damage and resume normal export operations.
The E4 nations comprising the United Kingdom, France, Germany and Italy have reportedly expressed willingness to ease sanctions on Iran if progress is made regarding its nuclear programme.
Such developments could further support the restoration of Iranian oil exports and contribute to improved global supply conditions in the coming months.
Crude oil prices have retreated sharply as the prospect of a US-Iran peace agreement reduces concerns over supply disruptions in the Middle East. While the reopening of the Strait of Hormuz could significantly improve global oil flows, investors remain focused on the pace of supply recovery and the outcome of upcoming diplomatic negotiations.
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Published on: Jun 15, 2026, 10:56 AM IST
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