Global oil prices dropped sharply on Monday while Asian stock markets rallied amid growing optimism that a peace agreement between the United States and Iran could ease tensions in the Middle East and reopen key global shipping routes.
The decline followed comments from Donald Trump, who said over the weekend that a deal with Tehran had been “largely negotiated,” though final details were still under discussion.
Global benchmark Brent crude fell by 5.5% to $97.90 per barrel, while US crude dropped nearly 6% to $90.93 during Monday trading in Asia.
Investors reacted positively to expectations that the Strait of Hormuz — one of the world’s most important energy shipping lanes — could soon reopen after months of disruption caused by the conflict between Israel, Iran and the United States.
The strait normally handles around one-fifth of global oil and liquefied natural gas shipments, making any disruption a major concern for global energy markets.
Asian markets responded strongly to the news, with Japan’s Nikkei 225 index climbing above 65,000 for the first time after rising 3%. Countries like Japan and South Korea have been heavily affected by the energy crisis because of their dependence on Gulf oil supplies.
Trump said he had held discussions with leaders from Saudi Arabia, Qatar and the United Arab Emirates regarding a possible “Memorandum of Understanding pertaining to PEACE.”
However, the US president later cautioned negotiators against rushing an agreement, saying both sides “must take their time and get it right.”
Iranian officials acknowledged that negotiations had made progress but warned that major disagreements still remain.
Despite Monday’s sharp decline, oil prices remain significantly higher than before the conflict began earlier this year, highlighting continued uncertainty in global energy markets.
