Oil prices tumbled below $80 a barrel on Tuesday, hitting three-month lows as markets cheered a framework agreement between the United States and Iran expected to end their conflict and restore vital crude shipments through the Strait of Hormuz.
Brent crude, the global benchmark, dropped as much as 4-5% intraday to $79.87 before partially recovering to around $80.50. West Texas Intermediate (WTI) crude fell even sharper, sliding toward $77 and briefly dipping under $79 in early trading. The declines mark the steepest moves in months, reversing gains fueled by earlier supply disruptions from the conflict.
The sell-off followed announcements of a memorandum of understanding that includes immediate waivers allowing Iran to sell oil and access related services such as banking, transportation, and insurance. A senior U.S. official confirmed Tehran could begin exporting crude promptly upon signing, with broader sanctions relief to follow on an agreed timetable.
President Donald Trump hailed the development on social media, posting that ships should prepare to move and declaring, “Let the oil flow!” He added that the strait would be “completely open” by Friday, signaling a swift resumption of commercial traffic through the chokepoint that handles roughly one-fifth of global oil trade.
The deal extends a fragile ceasefire and aims to halt broader hostilities that erupted in late February with U.S.-Israeli strikes on Iran. Those actions had blocked shipments, drained inventories, and pushed prices above $119 at peaks. Iran’s deputy foreign minister Kazem Gharibabadi confirmed on state TV that a deal had been finalized.
Analysts caution that full supply normalization could take weeks or months. Mines, damaged infrastructure, and lingering geopolitical risks may delay a complete return to pre-war flows. Energy experts note that while Iranian tankers could move soon, global gasoline prices at the pump may not drop sharply overnight.
The agreement does not fully resolve all flashpoints, including Iran’s nuclear program and tensions involving Israel and Lebanon, leaving some volatility risks intact. Wall Street banks have already begun trimming price forecasts in response to the expected supply wave.
