Oil prices sink further as Trump signs deal to reopen Hormuz

Oil prices experienced a sharp decline on Thursday, extending losses after U.S. President Donald Trump and Iran's President finalized a deal to end their conflict and reopen the vital Strait of Hormuz.

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Just signed it.

The agreement, signed in Versailles following a G7 summit, has injected optimism into energy markets, which have been volatile for over three months due to the war. The deal includes the immediate lifting of U.S. naval blockades and oil sanctions on Iran, the release of a $300 billion reconstruction fund, and Iran's commitment to dilute its enriched uranium as part of ongoing negotiations for a long-term agreement.

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was finalised with the signatures of the presidents

Pakistan's Prime Minister Shehbaz Sharif, whose officials mediated the pact, announced on X that Iran would instantly reopen the Strait of Hormuz, through which approximately one-fifth of the world's oil typically flows. Tehran had effectively closed the waterway after the U.S. and Israel initiated hostilities against Iran on February 28.

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As a first step, the Islamic Republic of Iran will instantly reopen the Strait of Hormuz and the United States of America will immediately lift the naval blockade.

Stephen Innes of SPI Asset Management noted that the deal should remove the "panic premium" from crude oil prices. The news comes as global equities showed mixed performance, with markets also factoring in expectations of potential interest rate hikes by the U.S. Federal Reserve. Meanwhile, South Korean stock markets, particularly chip manufacturers, surged due to continued growth in the artificial intelligence sector.

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A signed MOU and a faster path toward reopening the Strait of Hormuz should pull some of the panic premium out of crude.