Global oil prices fell sharply on Monday after reports emerged that Pakistan had helped broker a peace agreement between the United States and Iran.
Brent crude dropped about 4% to $83.81 per barrel in early Asian trading, while US West Texas Intermediate (WTI) fell nearly 5% to around $80. Markets reacted positively to news of a potential breakthrough that could ease geopolitical tensions in the Middle East.
Pakistan’s Prime Minister Shehbaz Sharif announced that Washington and Tehran had reached a peace deal following intensive negotiations facilitated by Pakistan along with other regional partners. He said both sides had agreed to an immediate and permanent halt to military operations across multiple fronts, including Lebanon, with a formal signing ceremony expected in Switzerland on June 19.
Sharif thanked the United States and Iran for opting for diplomacy and also acknowledged the role of Qatar, Saudi Arabia, and Türkiye in supporting the negotiations.
Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that an agreement with the US had been finalized. US President Donald Trump also welcomed the development, posting, “Let the oil flow!”
The announcement boosted hopes that the Strait of Hormuz—a critical global energy shipping route handling around one-fifth of global oil and LNG trade—could reopen after months of disruption linked to escalating regional tensions involving the US and Israel.
However, uncertainty remains over the implementation of the agreement. Analysts noted that key details, including security arrangements and verification mechanisms, are still unclear, which could keep oil markets volatile in the near term.
Even with the diplomatic breakthrough, restoring normal shipping through the Strait of Hormuz is expected to take time, potentially requiring security clearances, mine clearance operations, and the gradual clearing of tanker backlogs.
