Crude oil prices are down 5% and trading near $80 U.S. a barrel on news that the U.S. and Iran have reached a lasting peace deal, and amid expectations that the Strait of Hormuz will reopen.
West Texas Intermediate (WTI) crude oil, the U.S. standard, is down 5.37% and trading at $80.30 U.S. per barrel early on June 15. It’s the lowest level for U.S. crude since March.
Brent crude oil, the international benchmark, is down 4.80% and trading at $83.10 U.S. a barrel after the U.S. and Iran each said they have reached a framework for a lasting peace agreement.
The Strait of Hormuz waterway near Iran, where 20% of the world’s crude oil is typically shipped, is expected to reopen within 30 days.
The disruption to the Strait of Hormuz, which has been effectively closed since Feb. 28 of this year, has triggered the biggest oil supply shock in history.
Investors are cheering news of a peace deal and reopening of the Strait of Hormuz, with stocks soaring around the world on June 15.
However, energy analysts warn that it is likely to take months for the strait to fully reopen and shipments through it to normalize and return to pre-war levels.
Still, crude oil prices are down sharply on news of an end to military operations between the U.S. and Iran. Crude prices had been above $110 U.S. a barrel in recent months.
The decline in crude prices is expected to bring relief to motorists who will now pay less for gasoline at the pumps.
The stocks of oil majors such as Chevron (NYSE: $CVX) and Occidental Petroleum (NYSE: $OXY) are down about 5% on June 15, mirroring the decline in crude prices.
