LONDON, June 15 – Global oil prices fell to their lowest levels in more than three months on Monday after the United States and Iran signaled progress toward ending their conflict and restoring shipping through the strategically important Strait of Hormuz.
Brent crude futures declined $4.08, or 4.7%, to $83.25 per barrel, while U.S. West Texas Intermediate (WTI) crude fell $4.35, or 5.1%, to $80.53 per barrel. Both benchmarks touched their lowest levels since March after extending losses recorded at the end of last week.
The decline followed statements from U.S. President Donald Trump and Iranian officials indicating that an initial agreement had been reached to halt hostilities and begin restoring maritime traffic through the Strait of Hormuz.
According to Pakistani officials, who have acted as mediators in the negotiations, the United States and Iran are expected to sign a memorandum of understanding in Switzerland later this week.
Trump also announced that vessels would be allowed to transit the Strait of Hormuz without restrictions and that the U.S. naval blockade of Iranian ports would be lifted.
Iran’s Deputy Foreign Minister Kazem Gharibabadi indicated that broader negotiations would continue during a proposed 60-day ceasefire period, while Iranian media reported that the draft agreement envisions the reopening of the Strait within 30 days.
The Strait of Hormuz is one of the world’s most important energy chokepoints, handling roughly one-fifth of global oil and liquefied natural gas shipments.
Its closure during the conflict disrupted energy markets, removed millions of barrels of daily supply from global markets and contributed to elevated oil prices over recent months.
Analysts said markets are now rapidly removing the geopolitical risk premium that had been built into crude prices.
“The geopolitical risk premium that had been built into crude is now being unwound quite aggressively as traders price in the prospect of restored oil flows,” said Tim Waterer, Chief Market Analyst at KCM Trade.
Investors are now closely watching how quickly oil producers across the Middle East can restore production, export operations and shipping logistics after months of disruption.
While a ceasefire could ease immediate supply concerns, analysts caution that the normalization process may take time due to infrastructure damage, shipping constraints and broader economic impacts created by the conflict.
According to Commonwealth Bank of Australia commodities strategist Vivek Dhar, oil flows may only need to recover to around 60% to 70% of pre-war levels for markets to return to expectations of oversupply that existed before the conflict.
Meanwhile, European powers including the United Kingdom, France, Germany and Italy signaled their willingness to consider easing sanctions on Iran if progress is made on nuclear-related commitments.
Market participants say attention is now shifting from political announcements to implementation.
Analysts note that while the prospect of renewed energy flows has improved market sentiment, oil-importing economies across Africa, Asia and Europe continue to face the economic consequences of months of elevated fuel and energy costs.
The pace of supply normalization, compliance with the agreement and the recovery of regional energy infrastructure are expected to remain key drivers of oil market performance in the coming months.
