Oil Prices Fall Again After US-Iran Sign MoU

Global oil prices fell again on Thursday (18/6) after the presidents of the United States and Iran signed an agreement to end the war and reopen the Strait of Hormuz. The news boosted optimism for lasting peace between the two nations after more than three months of conflict that had rocked energy markets and triggered a fresh surge in inflation.

According to AFP, crude prices dropped more than three percent on Thursday, extending declines that began when news of the deal first circulated late last week. Around 06.25 GMT, the main US crude benchmark, West Texas Intermediate, was down 3.4 percent at US$74.18 per barrel. The international benchmark, Brent North Sea crude, fell 3.02 percent to US$77.15 per barrel.

President Donald Trump signed the memorandum of understanding with Iran at the Palace of Versailles in France following the G7 summit on Wednesday evening local time. He told reporters: “Just signed it.” Iranian foreign ministry spokesman Esmaeil Baqaei, quoted by state news agency IRNA, also confirmed the document “has been finalised with the presidents’ signatures.”

All eyes are now on the Strait of Hormuz, through which a fifth of the world’s oil normally transits and which Tehran effectively closed after the US and Israel launched a war against Iran on 28 February. “As a first step, the Islamic Republic of Iran will immediately reopen the Strait of Hormuz and the United States will immediately lift the naval blockade,” said Pakistani Prime Minister Shehbaz Sharif, whose officials mediated the deal.

The agreement commits Washington to immediately lifting oil sanctions and facilitating a US$300 billion reconstruction fund, while Tehran agrees to reduce enriched uranium stockpiles as talks on a long-term deal proceed.