(RTTNews) – Oil prices fell more than 5% on Monday, reaching a three-month low after the United States and Iran agreed to an initial deal that would end hostilities, lift the naval blockade on Iranian ports, and reopen the Strait of Hormuz, which handles about one-fifth of global oil shipments.
The signing ceremony is scheduled for Friday in Switzerland, after weeks of mixed signals from Washington and Tehran regarding the conflict’s direction.
Official terms have not yet been disclosed, so the precise details of the agreement remain unclear. Trump indicated that the tentative arrangement calls for opening the Strait of Hormuz but provided no further specifics.
Brent crude futures for August delivery dropped 5.3% to $82.73 per barrel, and WTI crude futures for July delivery fell 5.5% to $80.22 per barrel.
Trump said on Sunday that the agreement would enable oil to flow and enhance regional peace and security.
The exact terms of the agreement are still unknown, and several issues remain unresolved.
Analysts warn that the ongoing conflict between Israel and Lebanon could still jeopardize the negotiations.
Axios reports that the memorandum of understanding is expected to launch a 60-day negotiation period to resolve disputes concerning Iran’s nuclear program, sanctions relief, regional security, and the reopening of the Strait of Hormuz.
U.S. Vice President JD Vance stated that the agreement assumes Iran will not pursue a nuclear weapon and that the United States will be able to verify compliance.
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that a deal had been reached and said the full text will be published after Friday’s ceremony.
Iran’s Supreme National Security Council said that final negotiations will be postponed until the other party fulfills its commitments under the memorandum.
World leaders have welcomed the emerging agreement to end more than 100 days of conflict and called for its swift implementation.
Speaking at a monetary policy conference in Frankfurt, ECB Governing Council member Joachim Nagel said that it will take months for global oil supply to normalize after recent disruptions.
