LONDON — Brent crude oil fell below $100 a barrel on Tuesday after the United States and Iran reached an agreement to reopen the Strait of Hormuz, officials said.
Oil markets reacted sharply to the development, which is expected to ease supply disruptions caused by the closure of the vital waterway. Brent crude, the global benchmark, dropped more than 4% in early trading to trade around $83 a barrel, according to market data. U.S. West Texas Intermediate crude also declined sharply.
The agreement, announced in recent days, includes provisions to resume tanker traffic through the Strait of Hormuz, a narrow chokepoint through which about one-fifth of global oil trade typically passes. The strait had been effectively closed since late February following U.S.-Israeli strikes on Iran and subsequent retaliatory actions.
Pakistani Prime Minister Shehbaz Sharif, whose country has mediated talks, said the two sides would sign a memorandum of understanding on Friday in Switzerland. The pact aims to extend a ceasefire and normalize shipping, though full implementation details remain under discussion.
U.S. President Donald Trump stated that the deal would allow oil to flow without tolls imposed by Iran and end a naval blockade of Iranian ports. “Let the oil flow,” Trump posted on social media. Iranian officials confirmed progress on reopening the strait under agreed arrangements.
The price decline follows months of elevated oil costs triggered by the conflict. Brent crude had surged above $110 a barrel earlier in the year amid supply fears before easing on optimism about de-escalation. Analysts noted that while the agreement boosts expectations for restored flows from Gulf producers, physical repairs to infrastructure and mine clearance could delay a full return to pre-conflict export levels.
“Markets are pricing in a significant supply recovery, but the timeline for tankers to resume normal operations is not immediate,” a trader at a major European bank said, speaking on condition of anonymity.
Oil industry executives have cautioned that global inventories remain low and that prices could stay volatile even after the strait reopens. The U.S. Strategic Petroleum Reserve has been drawn down substantially during the disruption period.
Trading volumes were elevated Tuesday as investors assessed the implications for energy markets and broader economies. Stock markets in Europe and Asia rose on the news of lower energy costs.
As of Tuesday afternoon in London, Brent crude was holding below the $100 threshold. Further details on the exact terms of the Hormuz reopening schedule were still emerging.
