Oil prices fell 4% after Pakistan confirmed a US‑Iran deal to reopen the Strait of Hormuz
Oil markets cooled in early Asian trade as news reached investors that Pakistan, acting as an intermediary, had sealed an agreement that President Donald Trump said would see the Strait of Hormuz – the vital shipping lane for about 20% of global oil and LNG – reopen to commercial traffic.
Brent crude dropped 4% to $83.81 a barrel, and U.S. oil traded just below $80.90, a decline that mirrored the sharp corrective move seen after the wave of uncertainty that followed the US-Israel airstrikes on Iran on 28 February.
Pakistan’s Prime Minister Shehbaz Sharif said the official signing would take place on Friday, June 19 in Switzerland. Iran’s Deputy Foreign Minister Kazem Gharibabadi confirmed the deal on state television, while Trump tweeted “let the oil flow!” to underline the expected outcome.
Energy‑market analysts remain cautious. Vandana Hari of Vanda Insights cautioned that the absence of detailed terms could inject “unease and uncertainty” into the market, potentially prolonging a week of volatility. Andrew Lipow of Lipow Oil Associates warned that even once the waterway is reopened, clearing the backlog of mines and resuming normal loading operations could take weeks to months, keeping prices on a tight leash.
The impact of the conflict has been felt most strongly in Asia, where many economies rely heavily on Middle‑Eastern oil and LNG. In response to the news, Japan’s Nikkei 225 surged 4.3% in morning trade, and South Korea’s Kospi jumped more than 5%.
Historically, the region has experienced rapid price swings: Brent fell around $70 a barrel when tensions were low, and peaked near $120 during the height of the conflict. Analysts note that the return to pre‑war shipping volumes may take longer than anticipated.
For readers interested in the broader economic ripple effects, Reuters and other outlets have highlighted how the Iran war is exposing global reliance on Gulf oil and gas and the contraction of UK and European economies as a result.
