(RTTNews) – Oil prices plunged more than 5 percent to reach three-month lows on Monday after the United States and Iran reached an initial agreement to end their war, lift the U.S. naval blockade on Iranian ports, and reopen the Strait of Hormuz that affects roughly one-fifth of global oil shipment.
Signing ceremony is set for Friday in Switzerland following weeks of mixed messaging from both Washington and Tehran on the trajectory of the conflict.
With no official terms yet released, exact details of the deal are not clear. Trump said the tentative deal included opening the vital Strait of Hormuz, without giving further details.
Brent crude futures for August delivery plummeted 5.3 percent to $82.73 a barrel, while WTI crude futures for July delivery were down 5.5 percent at $80.22.
“Let the oil flow!” Trump exclaimed on Sunday and declared that the “great deal” which is “now complete” would bring “peace and security to the whole region.”
The specific terms of the agreement remain unknown, and it is learnt that many issues remain unresolved.
Analysts say that the simmering conflict between Israel and Lebanon could also still lead to a breakdown of talks.
According to Axios, the MoU is expected to trigger a new 60-day negotiating period to address disputes over Iran’s nuclear program, sanctions relief, regional security, and the reopening of the Strait of Hormuz.
U.S. Vice President JD Vance said that Iran never processing a nuclear weapon was “build into this agreement” and that the U.S. will be able to verify compliance.
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that a deal had been reached and said the text would be released following Friday’s ceremony.
Iran’s Supreme National Security Council stated that “final negotiations will be postponed until after the implementation of the other party’s commitments under the memorandum.”
World leaders have welcomed the emerging agreement to end more than 100 days of war and urged its swift implementation.
In remarks delivered during a monetary policy conference in Frankfurt, European Central Bank (ECB) Governing Council member Joachim Nagel stated that it will take months for global oil supply to normalize following recent disruptions.
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