Oil prices plunged on Monday after the U.S. and Iran announced a tentative deal to end the war and reopen the Strait of Hormuz, potentially restarting the flow of about a fifth of the world's energy after more than three months.
Brent crude, the international benchmark, plummeted by more than 5%, hovering below $83 a barrel at 7:10 a.m. ET, while West Texas Intermediate, the U.S. benchmark, dropped further and stood just above $80 a barrel at the same time.
President Donald Trump announced the deal on Sunday. A formal agreement will be signed in Switzerland this week, according to Pakistani Prime Minister Shehbaz Sharif.
"This Great Deal will bring Peace and Security to the whole Region. Many presidents have tried to make Peace with Iran, and all have failed before me. The Leaders of the Region have, for the first time, found a President who can help them achieve real Peace. With the opening of the Strait upon the signing of the Deal on Friday, for purposes of mine removal, oil will flow on both ends again for the Region, and the World!" Trump said in a social media post on Sunday.
The AP noted that details of the deal have not been released yet. Until then, and given Trump's wording in the mentioned post, traffic through the Hormuz Strait will likely remain limited. Iran's deputy foreign minister, Kazem Gharibabadi, said the the country won't begin implementing the deal until it is signed.
Officials from both Iran and the U.S. will hold preparatory meetings in Qatar this week before the signing, the outlet added, quoting an anonymous source familiar with the details.
Challenges still remain to fully implement the deal. Israeli Defense Minister Israel Katz said on Monday that the country won't withdraw from land seized in Lebanon, where it is fighting Hezbollah, an Iranian ally. A spokesman in Prime Minister Benjamin Netanyahu's office said the country will continue defending itself against any threat. Iran has repeatedly threatened to renew strikes against Israel as a result of attacks against Hezbollah, saying it considers the two fronts as a united one.
Israel spokesman David Mencer said that Israel and the U.S. remain fully aligned on the goal to prevent Iran from acquiring a nuclear weapon, but noted that Israel won't tolerate attacks from Hezbollah on its territory.
