Global oil prices slid sharply on Tuesday, dropping below the $80-per-barrel mark for the first time in more than three months, as investors reacted positively to signs of easing tensions between the United States and Iran.
Brent crude, the international oil benchmark, fell by about four per cent to $79.87 per barrel before recovering slightly, while US West Texas Intermediate (WTI) dropped nearly five per cent to trade below $77 per barrel.
The decline followed US President Donald Trump’s announcement that the Strait of Hormuz — one of the world’s most important oil shipping routes — would be fully reopened after Washington and Tehran formally sign a peace agreement in Switzerland on Friday.
Iranian media also reported that three oil tankers and two cargo vessels had already successfully passed through the strategic waterway, reinforcing market optimism that normal shipping activities could soon resume.
Despite the sharp drop in oil prices, analysts cautioned that uncertainty remains. While the conflict appears to be easing, questions persist over Iran’s plans to charge vessels for maritime services once the strait is reopened, a move that could still affect shipping costs and energy markets.
Financial markets reacted cautiously to the development. In the United States, the Dow Jones Industrial Average gained 0.8 per cent, while the broader S&P 500 slipped 0.2 per cent. The Nasdaq also posted modest losses as investors awaited further details of the agreement.
European markets closed in positive territory, with gains recorded in London, Paris and Frankfurt. Analysts said investors were beginning to price in the economic benefits of reduced geopolitical tensions and lower energy costs.
However, market observers warned that oil prices are still trading above levels seen before the outbreak of the conflict. Supply concerns and efforts to rebuild strategic reserves, particularly in the United States, could continue to influence prices in the coming weeks.
Attention is also shifting to major central bank decisions expected this week. The US Federal Reserve is widely expected to keep interest rates unchanged, while the Bank of England is also expected to hold rates steady. Meanwhile, the Bank of Japan raised interest rates to their highest level since 1995.
For now, investors are watching closely to see whether the US-Iran agreement translates into lasting stability in the Middle East and a sustained decline in global energy prices.
