Global oil prices fell below $80 per barrel on Tuesday, driven by market optimism over a potential US-Iran agreement that could reopen the Strait of Hormuz and ease supply disruptions. The development has helped ease inflationary pressure on global economies, although traders remain cautious over possible Iranian “service fees” on ships passing through the strategic waterway.
Brent North Sea crude, the international benchmark, dropped by 4.0 per cent to $79.87 per barrel - marking a three-month low and its first dip below $80 since early March - before recovering slightly to $80.52. Meanwhile, US benchmark West Texas Intermediate fell 4.5 per cent to $77.16 per barrel before edging back towards $78.
US President Donald Trump said the Strait of Hormuz would “completely open” once Washington and Tehran formally sign a peace agreement expected in Switzerland on Friday. Iranian media reports also indicated that several vessels, including three oil tankers and two cargo ships, have already passed through the waterway.
Despite the price decline, global equity markets showed mixed reactions. In early trading, the Dow Jones rose 0.6 per cent, while the S&P 500 gained 0.1 per cent and the Nasdaq added 0.3 per cent. European markets closed slightly higher, while Asian markets ended unevenly.
Analysts noted that while the agreement has yet to be finalised, markets are beginning to reflect what some describe as a “peace dividend.” However, concerns remain that supply conditions could stay tight in the coming weeks or months even after the conflict eases.
Energy data from the US also showed strategic oil reserves at their lowest level since 1983, indicating sustained demand for replenishment. Attention this week remains on central bank decisions, with the US Federal Reserve and Bank of England expected to hold rates steady, while the Bank of Japan recently raised rates to their highest level since 1995.
Meanwhile, tech stocks gained momentum following another strong performance from Elon Musk’s SpaceX listing, which surged sharply for a second consecutive session.
