📉 Global Oil Prices Tumble Following US-Iran Peace Deal

Global oil prices slid to their lowest levels since March after a surprise diplomatic breakthrough between the US and Iran to end their conflict and reopen the Strait of Hormuz, a critical chokepoint handling 20% of global oil and LNG supply. Key Figures & Market Reaction: • Brent crude futures dropped by $4.08 (4.7%) to US$ 83.25 a barrel. • US West Texas Intermediate (WTI) fell by $4.35 (5.1%) to US$ 80.53 a barrel. • The sharp decline unwinds the aggressive geopolitical risk premium built up during a three-month closure of the strait. The Agreement Details: • A memorandum of understanding is set to be signed in Switzerland this Friday, mediated by Pakistan. • The draft deal outlines the reopening of the Strait of Hormuz within 30 days under Iranian arrangements. • The US will lift its naval blockade of Iranian ports, and the E4 nations (UK, France, Germany, Italy) have expressed readiness to lift sanctions on Iran. • A broader, permanent agreement will be negotiated during an upcoming 60-day ceasefire period. Impact on Oil-Importing Economies: • Analysts note that oil flows only need to reach 60-70% of pre-war levels to return markets to an oversupply state. • While the drop offers immediate relief, experts warn that the economic strain previously endured by energy-importing nations—such as Sri Lanka, which relies heavily on imported fuel and energy for industrial production—cannot be reversed overnight due to structural infrastructure damage and months of elevated costs.