Global oil prices fell sharply in early Asian trade on Monday after the United States and Iran reached a deal to end their war, easing market concerns over supply disruption in the Middle East.
Brent crude futures, the global oil benchmark, dropped to a session low around $83.96 a barrel — about 4% lower — while US-traded West Texas Intermediate touched $80.25 and was down about 4.1% at $81.40, the BBC’s business desk reported, citing Asian market trade. The decline came as traders priced in Sunday evening’s joint announcement by US President Donald Trump and Pakistani Prime Minister Shehbaz Sharif that the war-ending agreement is complete, with the formal signing now set for Friday, June 19 in Switzerland.
Under the deal, the Strait of Hormuz — which Iran has effectively blockaded for months and through which roughly 20% of the world’s seaborne oil and liquefied natural gas normally passes — would reopen “toll free”, Trump said, with the US naval blockade of Iranian ports also to be lifted. “Ships of the World, start your engines. Let the oil flow!” the US president wrote on Truth Social. The strait had been effectively closed since shortly after US and Israeli forces launched airstrikes on Iran on February 28.
Brent, which traded around $70 a barrel before the conflict began, peaked at about $120 during the war as Hormuz risk premium and tanker insurance charges piled on. The slide brings the benchmark back close to its pre-conflict trading range, though it remains above the $70 floor. The move is the sharpest single-day correction since the rolling US-Iran exchange of fire earlier this month, when traders sold $86-handle on the Oval Office settlement framework before reversing on Israeli strikes.
For Sri Lanka, the price drop directly eases pressure on Ceylon Petroleum Corporation’s import bill, which spiked to US$886 million in April — up 149.9% year-on-year, or roughly 36% of the country’s $2.46 billion import basket that month. Sustained Brent in the low $80s, combined with the lifting of Hormuz risk-premium freight and insurance surcharges that took diesel premiums to $48-50 a barrel during the closure, could ease the trade gap that flipped Sri Lanka’s current account back into deficit in April. The Central Bank had blamed the Middle East conflict for the rupee’s 7% year-to-date slide. The price relief is not unanimous, however: Rapidan Energy’s Bob McNally on Sunday warned oil and gas prices could remain elevated until September even if Hormuz reopens, citing the US Strategic Petroleum Reserve drawdown and the loss of more than a billion barrels of Iranian production during the war.
Ada Derana, citing Reuters, separately confirmed Brent fell $3.58, or 4.10%, to $83.75 a barrel by 0004 GMT, while US WTI was at $80.87, down $4.01 or 4.72%. The Mehr news agency reported the draft deal calls for reopening Hormuz within 30 days under Iranian arrangements. “The geopolitical risk premium that had been built into crude is now being unwound quite aggressively as traders price in the prospect of restored oil flows,” said Tim Waterer, chief market analyst at KCM Trade. Investors are also watching how quickly Middle Eastern producers can resume oil production and exports following war damage.
Sources: Oil prices slide after Pakistan announces deal between US and Iran — BBC / Peter Hoskins, June 15; Oil prices tumble after US-Iran agreement announcement — Newswire / Reuters, June 15; Oil slips 4% as US, Iran reach peace deal to reopen Strait of Hormuz — Ada Derana / Reuters, June 15.
