Oil falls sharply after US-Iran deal optimism grows

Global oil prices dropped sharply on Monday after signs emerged of a possible peace agreement between the United

Global oil prices dropped sharply on Monday after signs emerged of a possible peace agreement between the United States and Iran. Investors reacted positively to reports that negotiations were moving forward and tensions in the Middle East could soon ease.

Brent crude, the international oil benchmark, fell more than 5 percent during Asian trading. US crude prices also slipped heavily. Markets responded after US President Donald Trump said a deal with Tehran had been “largely negotiated” and could be announced soon.

The biggest focus remains the Strait of Hormuz. The key shipping route has faced major disruptions since the conflict began earlier this year. Around 20 percent of the world’s oil and liquefied natural gas supplies normally pass through the narrow waterway.

Traders believe a successful agreement could reopen the route and restore stability to global energy markets. The possibility of smoother oil supplies immediately pushed stock markets higher across Asia.

Japan’s Nikkei 225 index surged nearly 3 percent and crossed the historic 65,000-point level for the first time. Investors welcomed hopes of lower fuel prices and reduced risks in global trade. Countries such as Japan and South Korea have suffered heavily from the crisis because of their strong dependence on Gulf energy imports.

Trump said he held important discussions with leaders of Saudi Arabia, Qatar, and the United Arab Emirates regarding a peace understanding for the region. He also spoke with Israeli Prime Minister Benjamin Netanyahu and described the talks as positive.

However, the US president later warned negotiators not to rush the agreement. He stressed that both sides must take enough time to avoid mistakes and ensure long-term stability.

Iran also signaled cautious optimism. Iranian Foreign Ministry spokesman Esmaeil Baqaei said negotiations with Washington had shown progress in recent days. Still, he warned that serious differences remained unresolved and accused the United States of sending mixed messages during the talks.

Oil markets have remained extremely volatile since fighting erupted in late February. Iran had threatened ships moving through the Strait of Hormuz after military strikes by the United States and Israel. The tensions triggered fears of a major disruption in global energy supplies and sent crude prices soaring worldwide.

Before the conflict began, Brent crude was trading close to $70 per barrel. Prices later surged sharply as fears of wider regional war intensified. Several Gulf states, including Saudi Arabia, Bahrain, and the United Arab Emirates, also faced threats during the escalation.

Although a temporary ceasefire was reached in April, negotiations for a permanent peace arrangement have continued quietly behind the scenes.

Energy experts believe the latest developments offer hope for some relief in oil markets. However, analysts say rebuilding damaged infrastructure, restoring shipping operations, and stabilizing global oil supplies may take considerable time even if a final agreement is reached soon.