Global oil prices fell sharply after the US and Iran reached a peace agreement aimed at ending the Middle East war, potentially paving the way for the reopening of the Strait of Hormuz, a crucial global energy transportation chokepoint. As of press time, Brent crude futures dropped nearly 4% to $83.90 per barrel; WTI crude futures fell over 4% to $81.19 per barrel. European natural gas futures also saw a significant decline, plunging by as much as 5.8% at one point.

US President Donald Trump posted on a social media platform that the agreement between the US and Iran is "now complete," and he has "authorized" the Strait of Hormuz to be "open for free" alongside the immediate lifting of the relevant blockade by the US Navy. Pending the formal signing of the agreement by both parties on June 19, the Strait of Hormuz will "reopen" on that day. Trump stated: "Ships of the world, start your engines. Let the oil flow!"

Meanwhile, Pakistani Prime Minister Shehbaz Sharif stated that after intensive negotiations, the US and Iran have reached a peace agreement. Both sides announced an immediate and permanent cessation of military operations on all fronts, including operations in Lebanon. The formal signing ceremony will be held in Switzerland on June 19. US Vice President JD Vance said he "definitely" plans to attend the signing ceremony, and Trump might also attend in person.

Iranian Deputy Foreign Minister Kazem Gharibabadi confirmed that the text of the US-Iran memorandum of understanding has been finalized, and the formal signing ceremony of the "Islamabad Memorandum" will be held in Switzerland on June 19. Gharibabadi stated that starting from the early morning of June 15, local time, two things will happen immediately: first, a permanent and immediate end to the war on all fronts, including the Lebanese front; second, the US will lift and terminate the naval blockade imposed on Iran. Iran's commitments will come into effect after the formal signing this Friday.

Gharibabadi said that following the ceasefire, the lifting of the US naval blockade, and the beginning of the unfreezing of Iran's frozen assets, the two sides will enter a 60-day negotiation period to discuss a final agreement. If the "other party breaches the contract," Iran will take corresponding measures, noting that the Iranian Armed Forces have "always kept their fingers on the trigger."

Gharibabadi added that during the 60-day negotiation period for the final agreement, both sides will negotiate on the nuclear issue, the lifting of US sanctions against Iran, the reconstruction of Iran's economic mechanisms, and the verification mechanisms for the commitments of all parties. Gharibabadi also confirmed that a statement regarding the agreement with the US will soon be issued by Iran's Supreme National Security Council.

Global energy markets have been deeply affected since the outbreak of the Middle East war at the end of February this year. At that time, the US and Israel launched attacks on Iran. In response, Iran launched strikes across the entire Persian Gulf region and closed the Strait of Hormuz. In peacetime, this strait handles about one-fifth of the world's crude oil transport volume. Additionally, the US military imposed a blockade on ships affiliated with Iran.

After oil prices soared in the early days of the conflict, prices have continued to retreat in recent weeks. This is due to Washington and Tehran constantly releasing signals that they are close to reaching an agreement, along with signs that some crude oil transported through the Strait of Hormuz has resumed flowing. Furthermore, developed economies have tapped into their emergency crude reserves, while some major importing countries have reduced their crude oil import volumes.

Although the agreement will bring significant benefits to energy producers in the Persian Gulf region, the global shipping industry, and consumers, the Strait of Hormuz—a critical shipping chokepoint—still faces many obstacles before it can fully resume navigation. These include clearing anti-ship mines and clarifying whether Iran intends to implement stricter controls on transiting vessels.

It is worth mentioning that if the situation in the Middle East further eases and the Strait of Hormuz can smoothly resume navigation, energy prices are expected to continue to decline. Even if the war ends in the short term, the previously elevated costs of energy, transportation, and raw materials may still continue to be passed down the supply chain to end-users. US consumers may still face upward pressure on prices of goods and services in the coming months, but the decline in energy prices is expected to cool inflation expectations and expectations of Federal Reserve interest rate hikes.

Disclaimer: The article is contributed by the market analyst from Binkex market observation team. The content is solely for personal opinions and sharing. The analysis is time-sensitive and provided for reference and discussion only. It does not constitute any investment advice. The market is risky, so investing should be done cautiously.