Oil prices fell sharply on Thursday as easing geopolitical tensions raised expectations for a swift end to the 110-day conflict between the United States and Iran.
Brent crude futures dropped 2.4% to $77.61 a barrel, moving closer to their lowest levels since early March, as traders weighed the International Energy Agency’s warning of a potential supply surplus and the prospect of the Strait of Hormuz reopening. July WTI crude futures declined 2.7% to $74.71.
The released text of the memorandum of understanding reached over the weekend calls for an immediate and permanent halt to military operations on all fronts, including Lebanon, the reopening of the Strait of Hormuz, and the lifting of the U.S. naval blockade against Iran.
Iran has agreed to downblend its stockpile of highly enriched uranium, a step a senior official described as a significant concession. Sanctions relief is tied to the nuclear settlement.
Iran will receive immediate waivers for crude oil exports, petroleum products, and related banking services upon signing the agreement.
Israel was not a party to the negotiations or the memorandum. Technical details are expected to be resolved during a 60-day negotiating period beginning after the scheduled signing ceremony in Switzerland on Friday.
President Donald Trump warned that he would resume attacks and target Iranian officials if Tehran failed to honor its commitments.
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