Oil prices declined sharply on Monday following reports of a breakthrough agreement between the United States and Iran, easing concerns over supply disruptions in one of the world’s most critical energy corridors.
Brent crude, the global benchmark, fell 3.9% to $84 per barrel, while US West Texas Intermediate (WTI) dropped 4.8% to around $81 per barrel as traders reacted to shifting geopolitical risk premiums.
Latest Oil Prices:
WTI Crude $81.10 -3.78 -4.45%
Brent Crude $83.90 -3.43 -3.93%
Murban Crude $83.02 -4.23 -4.85%
WTI Midland $85.24 -2.87 -3.26%
Opec Basket $97.18 -1.74 -1.76%
Indian Basket $92.58 +0.03 +0.03%
Natural Gas $3.068 -0.052 -1.67%
Gasoline $2.974 -0.076 -2.50%
Heating Oil $3.300 -0.104 -3.06%
The selloff followed comments by US President Donald Trump, who said in a post on social media early Monday that a peace agreement with Iran had been “finalized.” Iranian officials confirmed the signing of a memorandum of understanding with Washington, adding that a formal agreement is expected to be signed later this week.
The potential deal is seen as a major development that could significantly increase maritime traffic through the Strait of Hormuz, a strategic waterway responsible for a large share of global oil shipments.
According to regional reports, shipping activity through the strait has been heavily restricted since the outbreak of conflict earlier this year, with vessels previously facing high transit costs averaging around $2 million per passage, as cited by an Iranian lawmaker.
Analysts say the prospect of reopening the route has reduced immediate supply risk concerns, triggering a rapid decline in oil prices after several days of volatility. Brent crude had already fallen 3.4% on Friday, while US crude dropped 3.2% amid early speculation of diplomatic progress.
Energy market experts warn that if negotiations fail to restore full access to the Strait of Hormuz, prices could surge significantly. Bob McNally, president of Rapidan Energy Group, told ABC’s “This Week” that crude could potentially rise to between $100 and $150 per barrel under a prolonged disruption scenario, with gasoline prices in the United States reaching record highs.
On Sunday, the average price of gasoline in the US stood at $4.07 per gallon, according to the American Automobile Association.
Despite the decline in oil prices, equity markets responded positively to easing geopolitical tensions. Futures tied to the Dow Jones Industrial Average rose 0.6%, while S&P 500 and Nasdaq futures gained more than 0.7%, reflecting improved investor sentiment at the start of the trading week.
Market participants remain focused on the evolving diplomatic developments between Washington and Tehran, which could reshape global energy flows and significantly alter near-term price expectations in oil markets.
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