Oil prices fall back to US$80 per barrel amid optimism over Mideast peace deal

Global oil prices retreated to US$80 per barrel on Tuesday, marking the first time they have fallen to this level since early March. This decline is attributed to increasing optimism surrounding a tentative agreement between the United States and Iran, which is anticipated to lead to the reopening of the Strait of Hormuz.

The Strait of Hormuz is a vital chokepoint for global oil transportation, with approximately 20 percent of the world's oil passing through it. The potential reopening is expected to restore the normal flow of oil, thereby easing supply concerns that have contributed to price volatility. West Texas Intermediate and Western Canadian Select crude also saw price drops.

While significant challenges remain in the broader negotiations to end the conflict, including Iran's nuclear program, the tentative deal has boosted hopes on Wall Street for a long-term resolution. This development could help mitigate the inflationary pressures that have impacted the global economy.

Meanwhile, the U.S. Federal Reserve commenced its meeting on Tuesday to deliberate on interest rates, with an announcement scheduled for Wednesday. This is the first meeting under the new Fed chair, Kevin Warsh. Despite President Trump's advocacy for lower rates to stimulate the economy, the prevailing expectation is that the Fed will maintain its current interest rate.

The price of Brent crude has seen a substantial decrease from its recent peak above $100. However, it may take several months for the energy sector to fully recover and for consumers to experience the full impact of these price changes at the pump.