U.S. crude drops below $80 for the first time since March

Source Credit : Portfolio Prints

Oil prices tumbled on Monday after President Donald Trump announced that the United States and Iran had reached an agreement to reopen the Strait of Hormuz, a key global shipping route responsible for transporting nearly one-fifth of the world's oil supply.

U.S. crude oil futures for July delivery briefly fell below $80 per barrel for the first time since March before recovering slightly. By 5:40 a.m. ET, prices were down 5.5% at $80.15 per barrel, while Brent crude, the international benchmark, declined 5.1% to $82.87 per barrel.

In a post on Truth Social, Trump stated that the deal with Iran had been finalized and announced that the Strait of Hormuz would reopen without a toll system. He also said the United States would end its naval blockade of Iran, signaling a major de-escalation in tensions that had disrupted global energy markets for months.

Trump later said the strait would officially reopen on Friday, the same day a peace agreement signing ceremony is scheduled to take place in Switzerland. He added that mine removal operations would allow oil to flow freely again, restoring stability to both regional and global energy supplies.

The Strait of Hormuz is one of the world's most strategically important waterways, with roughly 20% of global oil supplies passing through it under normal conditions. However, tanker traffic sharply declined in early March following Iranian attacks, creating one of the largest oil supply disruptions in modern history and driving significant volatility across energy markets.

Pakistan Prime Minister Shehbaz Sharif, who has been serving as a mediator between Washington and Tehran, announced on Sunday that the United States and Iran had agreed to an immediate and permanent cessation of military operations across all fronts, including Lebanon.

Sharif thanked both countries for pursuing a diplomatic resolution and said mediators would hold meetings this week to establish the groundwork for technical discussions ahead of the official peace agreement signing ceremony.

Industry experts also expect shipping activity through the Strait of Hormuz to rebound quickly if the agreement remains credible and long-lasting. Speaking to CNBC last week, Frontline CEO Lars Barstad expressed optimism that tanker transit operations would resume rapidly once both countries committed to avoiding attacks on commercial shipping.

The announcement immediately eased concerns about global supply shortages, sending oil prices sharply lower as markets began pricing in the return of stable energy flows through one of the world's most critical maritime trade routes.