Oil drops and Asian stocks rally after US-Iran framework agreement on Hormuz
The United States and Iran have reached a framework agreement aimed at ending hostilities and reopening the Strait of Hormuz, triggering a sharp drop in oil prices and a rally in Asian equities.
Market reaction
Oil prices fell sharply across benchmarks and Asian stock indices surged in early trading after Washington and Tehran announced a framework agreement to end the months-long war. North Sea Brent crude for August delivery dropped 4.10 percent to $83.75 per barrel, its lowest since March, while US West Texas Intermediate (WTI) shed 4.72 percent to $80.87. Japan's Nikkei 225 jumped 4.6 percent half an hour after the open, and South Korea's Kospi climbed 5.8 percent over the same period.
- Brent crude
- -4.1 %
- WTI
- -4.72 %
- Nikkei 225
- 4.6 %
- Kospi
- 5.8 %
The agreement
US President Donald Trump and Iranian Deputy Foreign Minister Kasem Gharibabadi jointly disclosed the breakthrough. A formal signing is scheduled for Friday, 20 June. The draft foresees reopening the Strait of Hormuz within 30 days, according to Gharibabadi, while a 60-day ceasefire will provide the space to negotiate a broader accord centred on Iran's nuclear programme.
Ships of the world, start your engines. Let the oil flow!
Strait reopening
Trump stated that the strait would be opened after Friday's signing, though he cautioned that mines laid during the conflict must first be cleared. The US Navy would also lift its blockade of Iranian ports, Trump wrote on Truth Social. The Iranian news agency Tasnim, citing unnamed sources, confirmed that the waterway would reopen following the formal signing.
Economic context
The Strait of Hormuz is the conduit for roughly one-fifth of global oil and gas supplies. Its effective closure since late February by Iran's Revolutionary Guard has removed millions of barrels from the world market, driving energy prices higher and burdening economies worldwide. In Germany, the federal government introduced a fuel tax rebate — set to expire at the end of June — to cushion the impact.
International support
Several European countries welcomed the deal. Germany, France, the United Kingdom and Italy said they were "determined to support the resumption of shipping in the Strait of Hormuz," a pledge that includes purely defensive mine-clearance operations, according to the Spiegel report.
We are determined to support the resumption of shipping in the Strait of Hormuz.
