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SINGAPORE – Oil prices dropped on June 15 after US President Donald Trump and Iran’s deputy foreign minister said they have reached a deal to halt the war and to resume traffic through the Strait of Hormuz.
The global oil benchmark, Brent crude, fell US$3.51, or 4.02 per cent, to US$83.82 as at 6.03am Singapore time and US West Texas Intermediate was at US$80.95 a barrel, down US$3.93, or 4.63 per cent.
Trump said in a social-media post he was authorising the “toll free opening” of Hormuz, as well as ending a blockade of the Islamic Republic.
“Ships of the World, start your engines,” Trump said. “Let the oil flow!”
Pakistani Prime Minister Shehbaz Sharif said the agreement between the two sides would be signed in Switzerland on June 19, and would include the end of military operations in Lebanon, a key sticking point for Iran. Iran Deputy Foreign Minister Kazem Gharibabadi confirmed an agreement had been reached, and said the text of the memorandum would be published after the signing.
Global energy markets have been in thrall to the war since it erupted in late February, when the US and Israel attacked Iran to curb its nuclear programme. Tehran’s response included strikes across the Persian Gulf and shuttering Hormuz, which in peacetime carried about a fifth of global oil flows. Separately, US forces had imposed their own blockade of Iran-linked vessels.
While oil spiked in the initial period of the conflict, prices have given up ground in recent weeks on repeated signals that Washington and Tehran were close to an agreement, as well as signs that some crude flows via Hormuz had resumed. In addition, developed economies tapped emergency crude reserves, and some leading importers – notably China – scaled back imports.
European natural gas futures also tumbled, slumping as much as 5.8 per cent. REUTERS, BLOOMBERG
