A potential US-Iran agreement on Hormuz navigation and renewed talks sends crude benchmarks tumbling over 5% in early trading.
Oil prices fell sharply after reports of a US-Iran ceasefire deal, which includes guarantees for free navigation in the Strait of Hormuz. Brent crude dropped close to 5.5%, while WTI declined over 5% as markets priced in reduced geopolitical risk in a key oil transit chokepoint.
The agreement, expected to be announced in the coming days, also revives negotiations under the Islamabad Memorandum of Understanding. Prior tensions in the region had supported oil prices amid supply disruption fears, with Hormuz handling about one-fifth of global crude flows.
The immediate market reaction saw both benchmarks extend losses, reflecting investor expectations of eased supply constraints and lower risk premiums in oil pricing.